Moody's pares Korea Railroad

Moody's Investors Service said it downgraded Korea Railroad Corp.'s (Korail) issuer and senior unsecured ratings to Aa3 from Aa2, the senior unsecured medium-term note rating to (P)Aa3 from (P)Aa2 and the baseline credit assessment (BCA) to b3 from b2.

“The one-notch downgrade of Korail's rating and BCA reflects the company's very weak profitability and financial metrics that Moody's expects to continue over the next 12-18 months, despite a projected recovery in passenger volumes in 2023 to pre-Covid levels. Fare increases have not kept pace with rises in operating costs and interest expense, resulting in incremental debt to fund operating losses and capital spending.

The downgrade further reflects the deconsolidation of a more profitable subsidiary. On July 21, 2023, SR Co., Ltd. (A1 stable), a smaller high-speed railway operator, announced that the Korean government injected capital into the company to become its largest shareholder with a 59% direct ownership. This means that SR is no longer operated under the umbrella of Korail, although the latter still owns the remaining 41%,” Moody’s said in a statement.

The outlook remains stable.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.