Korea National Oil Corp.#s Proposed Swiss Franc Senior Unsecured Notes Rated #AA#

Stocks and Financial Services Press Releases Monday May 28, 2018 17:40
HONG KONG--28 May--S&P Global Ratings

HONG KONG (S&P Global Ratings) May 28, 2018--S&P Global Ratings today said it has assigned its 'AA' long-term issue rating to the Swiss franc-denominated senior unsecured notes due 2023 issued by Korea National Oil Corp. (KNOC; AA/Stable/--). The issue rating is subject to our review of the final issuance documentation.

KNOC plans to use the proceeds to refinance its debt obligations.

Our rating on KNOC is equalized with the sovereign credit ratings on South Korea (AA/Stable/A-1+) because we expect an almost certain likelihood of extraordinary government support if the company were to suffer financial distress. Wholly owned by the government, KNOC plays a critical role as the sole policy arm for managing the country's strategic petroleum reserves and improving its oil self-sufficiency.

As of end-2017, KNOC's capital structure consisted of about Korean won (KRW) 9.7 trillion of unsecured debt at the parent level, and about KRW0.7 trillion of secured debt and about KRW2.8 trillion of unsecured debt issued by the company's subsidiaries.

We rate KNOC's senior unsecured notes the same as the issuer credit rating on the company because we do not view KNOC's capital structure as representing any material risks, such as structural or contractual subordination. The company's priority debt ratio is about 27%, lower than our notching threshold.

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