S&P rates Korea Highway bonds A-

Standard & Poor's assigned an A- foreign currency rating to Korea Highway Corp.'s proposed $500 million global bonds due 2014. The outlook is stable.

S&P said Korea Highway's ratings are based on the company's critical policy role in the infrastructure development of Korea, specifically, the development and expansion of the country's highway network.

Korea Highway generates strong and steadily growing revenues through its extremely solid business position as the country's national highway operator, S&P said. Although Korea Highway's financial profile is characterized by massive, ongoing external funding requirements for an ambitious expansion program, this is largely offset by the support it receives from the Korean government.

Korea Highway dominant market position and strong relationship with the government should enable the company to continue generating stable cash flows and receive financial support from the government when needed, S&P said.

Because of its critical policy role, Korea Highway's rating is closely linked to the sovereign rating on the Republic of Korea. However, Korea Highway's credit quality is not equivalent to that of the Republic of Korea, as it is constrained by the lack of clear mechanisms in place for setting tolls, which make up the bulk of the company's revenues.

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