Fitch affirms Korean issuers

Fitch Ratings said it affirmed 12 Korean state-owned enterprises after the upgrade of South Korea's long-term foreign-currency issuer default rating (AA-/stable).

The outlook is positive.

The issuers are Korea Expressway Corp. (A+/positive), Korea Electric Power Corp. (Kepco, A+/positive), Kepco's six generation companies, Korea Land and Housing Corp. (A+/positive), Korea Gas Corp. (Kogas, A+/positive), Korea District Heating Corp. (A/positive) and Korea National Oil Corp. (A+/positive).

The upgrade of Korea's sovereign ratings reflects the country's continued economic and financial stability, but the debt stock of the 28 key non-financial state-owned enterprises have increased substantially to 26.6% of Korea's GDP from 16.2% in 2007, according to the agency.

This, together with the weaker operating cash generation of some of the SOEs due to price controls (Kogas and Kepco, for example), has led to a continuous deterioration of these entities' financial profiles, the agency noted.

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