Reuters logo
Fitch Affirms Korea Land and Housing at 'AA-'; Outlook Stable
September 29, 2016 / 1:52 PM / a year ago

Fitch Affirms Korea Land and Housing at 'AA-'; Outlook Stable

(The following statement was released by the rating agency) HONG KONG, September 29 (Fitch) Fitch Ratings has affirmed Korea Land and Housing Corporation's (KLHC) Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'AA-' with a Stable Outlook. Fitch has also affirmed KLHC's senior unsecured bonds at 'AA-'. KLHC's ratings and the Stable Outlook reflect the company's strong ties with the Korean government and its status as the state's sole policy execution arm for national housing and land development. KEY RATING DRIVERS Ratings Equalised with Sovereign: KLHC's ratings are equalised with the ratings of South Korea (AA-/Stable) due to its status as a not-for-profit quasi-government institution and strategic importance to the state. Fitch believes there is a strong likelihood that the state would extend extraordinary support to the company, if needed. Critical State Policy Arm: KLHC implements the state's land and housing policies to ensure a stable supply of residential housing and efficient use of national land. KLHC is also a major developer of new cities, industrial and logistics complexes and high-tech zones. The company's strategic importance has been further strengthened as the Korean authority wants KLHC to focus more on providing housing welfare and city renewal projects. Solid State Support: KLHC is entitled to receive state compensation for losses incurred in connection with certain eligible public projects if the company fails to maintain an overall level of profitability for a given year, as outlined in Article 11 of the Korea Land and Housing Corporation Act. The state also provides KLHC with regular capital injections (KRW1.1trn in 2015), low-interest long-term subordinated debt (34.8% of total debt in June 2016) and subsidies for public projects. Article 9 and 10 state that the Korean government may provide a guarantee for the repayment of interest and principle of overseas and onshore debt. Strong Control and Supervision: KLHC is wholly owned by the state (directly and indirectly) and, as such, is closely supervised by the Korean government. It reports to - and is supervised by - the Ministry of Strategy and Finance and the Ministry of Land, Infrastructure and Transportation. The state appoints the company's president and external auditor. Weak Financials; Adequate Liquidity: The company's not-for-profit quasi-government institution status provides it with ready access to local and international funding markets. Weak financial metrics and cash-generating ability are mitigated by strong financial and policy state support. KLHC maintains adequate liquidity. Debt Reduction Efforts: KLHC has made a significant effort to reduce its debt, in accordance with the Korean government's initiative to reduce public-sector entity debt. Its debt/equity ratio declined to 253% in 2015, from 340% in 2013, and EBITDA interest coverage was 1.3x, the first time this ratio was above 1.0x. Further deleveraging is not probably, due to the company's large capex requirements. RATING SENSITIVITIES Positive rating action on the sovereign, in conjunction with continued strong state support, would result in a similar change in KLHC's rating. A sovereign downgrade, a dilution in state ownership and control or a weakening in KLHC's links with the government - including the importance of its public policy role and budgeting relationship - could trigger a rating downgrade. Contact: Primary Analyst Lin Pei Associate Director +852 2263 9912 Fitch (Hong Kong) Limited 19/F Man Yee Building 68 Des Voeux Road Central, Hong Kong Secondary Analyst Terry Gao Director +852 2263 9972 Committee Chairperson Vladimir Redkin Senior Director +7 495 956 9901 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: Additional information is available on Applicable Criteria International Local and Regional Governments Rating Criteria - Outside the United States (pub. 18 Apr 2016) here Rating of Public-Sector Entities - Outside the United States (pub. 22 Feb 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1012363 Solicitation Status here Endorsement Policy here ail=31 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below