S&P lifts Korea Expressway stand-alone rating

S&P said it affirmed the AA long-term corporate credit ratings on Korea Expressway Corp., along with the company’s AA foreign-currency global scale and cnAAA Greater China scale issue ratings.

S&P also said it revised the company’s stand-alone credit profile to BBB from BBB-.

The outlook is stable.

The revision of the stand-alone rating primarily reflects an expectation that the company will improve its operating and financial performance over the next two years, mainly due to a recent tariff hike and steady traffic volume growth, S&P explained.

The Korean government allowed Korea Expressway to raise its average toll rates by 4.7% in December 2015 after a four-year toll-rate freeze, the agency said.

This toll hike, which was somewhat higher than previous expectations, has substantially reflected the country's inflation rate over the past several years, S&P said.

The government is likely to control toll road rates somewhat less tightly than before, given loosening inflation pressure in Korea, the agency added.

And toll road traffic volume also is expected to grow steadily over the next 12 months, S&P said.

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