Moody's rates Korea Gas notes A1

Moody's Investors Service said it assigned an A1 rating to the proposed senior notes to be issued by Korea Gas Corp.

The outlook is stable.

Proceeds will be used for general corporate purposes, including capital expenditures and overseas investments, working capital and refinancing.

Kogas will issue the bonds under its global medium-term note program that it expanded to $5 billion on Jan. 5, from $3 billion.

"The A1 rating reflects the company's baseline credit assessment of baa3, and our assumption that the Korean government is likely to provide support to Kogas in a stress situation," Mic Kang, a Moody's vice president, said in a statement.

The A1 rating includes an uplift of five notches.

The baa3 baseline credit assessment reflects Kogas' effective monopoly in the transmission and wholesale selling of natural gas in Korea, the stability of the sector and the firm's strong access to debt markets, the agency said.

The rating also considers the company's weak financial profile and its high exposure to fluctuations in fuel import costs arising from the absence of a consistent mechanism to pass through cost increases to customers, the agency noted.

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