Moody's cuts Korea Electric Power to A2

Moody's Investors Service said it downgraded to A2 from A1 the issuer rating and senior unsecured debt rating of Korea Electric Power Corp., along with the senior unsecured debt ratings to A2 from A1 of subsidiaries Korea Hydro & Nuclear Power Co. Ltd., Korea East-West Power Co. Ltd., Korea Midland Power Co. Ltd., Korea South-East Power Co. Ltd., Korea Southern Power Co. Ltd. and Korea Western Power Co. Ltd.

The downgrade reflects heightened concerns over the deterioration in Korea Electric Power financial profile as a result of its exposure to high fuel costs and currency movement, Moody's said. Although fuel prices have eased since mid-2008, any cost savings have been offset by the sharp fall in the won as Korea Electric Power has not hedged its dollar-denominated fuel costs, the agency said.

The expected weak electricity demand growth, which closely tracks economic growth, will likely add further pressure on the company's deteriorating financial performance, Moody's added.

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