S&P lifts Korea Railroad, rates bonds A+

Standard & Poor's said it assigned an A+ rating to Korea Railroad Corp.'s (Korail) CHF 300 million senior unsecured bonds due Nov. 16, 2018.

The agency also said it raised the long-term foreign-currency rating on the company to A+ from A after raising the ratings on the Republic of Korea.

The ratings on Korail reflect the extremely high likelihood that the government would provide timely and sufficient extraordinary support if the company were to suffer financial distress, S&P said.

Korail's stand-alone credit profile is BB-, reflecting its satisfactory business risk profile based on its monopoly in national railroad operations, the agency said.

The ratings also consider its weak profitability as a result of operating losses in conventional rail network operations and freight services and its highly leveraged financial risk profile on the grounds of continued weak cash flow and significant investments in non-core businesses, such as property development, S&P added.

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