Moody’s rates Korea National Oil notes Aa2

Moody’s Investors Service said it assigned an Aa2 rating to the proposed senior unsecured dollar-denominated notes to be issued by Korea National Oil Corp.

The outlook is stable.

The notes will be issued under the company’s existing $9 billion global medium-term note program.

The proceeds will be used repay maturing borrowings and bonds, the agency said.

The rating reflects the high likelihood of timely extraordinary support from the Korean government given the company’s important policy roles and the high reputational and contagion risks that may arise if it were to default, Moody’s explained.

The government’s support is highly likely because the company has important mandated policy roles to ensure stable domestic oil supplies and improve the country’s self-sufficiency in oil and gas, the agency said.

The company also maintains close ties with the government as it is fully owned and closely supervised by the government, Moody’s said.

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