S&P Maintains Gas Corporation Credit Rating at 'AA' Despite COVID-19

Gas Gong "Strengthening Overseas Investors' Investment Sentiment and Issuing Foreign Debt under Competitive Conditions"

Exterior view of the Korea Gas Corporation headquarters building. (Photo by Korea Gas Corporation)

[Asia Economy Reporter Moon Chaeseok] International credit rating agency Standard & Poor's (S&P) announced on the 27th that it will maintain Korea Gas Corporation's long-term credit rating at 'AA' and short-term credit rating at 'A-1+' (the highest rating). The 'AA' rating is the same as South Korea's sovereign credit rating.

S&P judged that the impact of impairments on Korea Gas Corporation's overseas investments due to the decline in oil prices is limited, amid expectations that oil prices will recover between next year and 2022.

The corporation explained that the basis for this credit rating evaluation is S&P's statement that stable earnings are being secured through the raw material cost pass-through system, and that the individual credit rating is expected to remain stable over the next year.

S&P also viewed positively the proactive role Korea Gas Corporation is playing in investing in infrastructure construction for hydrogen energy supply in active response to the government's hydrogen economy revitalization policy.

This is because the relationship between the corporation and the government is expected to become closer due to the corporation's leading role in the natural gas industry and the strengthening of its public role in the hydrogen business. Generally, the closer the relationship with a government that has a high credit rating, the more favorable it is for the credit rating evaluation of a public enterprise.

The corporation's standalone credit rating was maintained at 'BBB', the highest level among Korean public enterprises. The standalone credit rating refers to a rating based solely on the company's profitability and asset soundness indicators, excluding the possibility of government support.

Despite sluggish business conditions caused by the novel coronavirus disease (COVID-19) and investment burdens in gas and hydrogen businesses, the corporation expects to maintain stable debt management and credit ratings. This is because operating cash flow has stabilized due to the raw material cost pass-through system and improvements in the wholesale tariff system.

A corporation official said, "Despite various adverse factors such as the decline in oil prices, maintaining the 'AA' rating, which is the same as the government's credit rating, will have a positive impact on overseas investors' investment sentiment," adding, "We expect to be able to issue foreign currency bonds under more competitive conditions."

This content was produced with the assistance of AI translation services.