(The following statement was released by the rating agency)
Dec 13 - Fitch Ratings has assigned Korea Finance Corporation’s (KoFC, ‘AA-'/Stable) proposed long-term senior unsecured JPY20bn notes maturing in December 2014 a ‘AA-’ rating. The proceeds will be used for KoFC’s general operations, including extending foreign currency loans.
The notes are rated at the same level as KoFC’s Long-Term Issuer Default Rating (IDR) as they represent direct, unconditional, unsecured and unsubordinated obligations of the company. KoFC’s IDR is in turn equalised with the IDR of South Korea’s sovereign.
The rating reflects Fitch’s belief of an extremely high probability of support from the government for KoFC. The Korean government is legally obliged to cover KoFC’s losses should its capital reserve funds fail to do so, as per Article 31 of the KoFC Act. That said, any change in South Korea’s sovereign ratings or the KoFC Act will affect KoFC’s ratings directly.
KoFC is 100%-owned by the government and is mandated to provide financial support to SMEs and new growth industries, and to promote stability in domestic financial markets. KoFC has a 90.26% stake in KDB Financial Group and does not take deposits.