Moody’s lowers Korea Resources

Moody's Investors Service said it downgraded Korea Resources Corp.'s issuer and senior unsecured ratings to Aa3 from Aa2.

The agency also said it downgraded the rating on its senior unsecured medium-term note program to provisional Aa3 from provisional Aa2.

Moody's also said it downgraded the senior unsecured bond rating of Minera y Metalurgica del Boleo SAPI de CV, guaranteed by Korea Resources, to Aa3 from Aa2.

The outlook is negative.

This concludes a review for downgrade that began in March, the agency said.

The downgrades were is in response to news that the Korean government would gradually reduce Korea Resources’ overseas mining investment business and consolidate its stockpiling and mining investment support functions with other related-entities over the medium term, Moody’s explained.

This changes the company’s policy roles and strategic importance to the government, which will decrease and remain less comparable with other core government-related issuers in Korea over an extended period, the agency said.

Still, Moody’s said it the likelihood of extraordinary governmental support remains very high given the company's status as a wholly owned central government-related issuer with a special founding act, along with the government's low tolerance for reputational and contagion risks arising from a default at the company.

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