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JG Summit
- Bond: JGSPM 4.125 30
- Indicative Yield-to-Maturity (YTM): 4.86%
- Credit Rating : Unrated
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Overview
AS OF 24 Jul 2025- JG Summit is a highly diversified Philippine conglomerate with market-leading positions in key sectors, serving a growing middle class in the Philippines and across Asia.
- The company benefits from a synergistic ecosystem across its strategic business units, ecosystem plays, and core investments, which drives value creation.
- A solid financial position and a strong management team underpin its long-term growth objectives and resilience amidst market fluctuations.
CreditSight View Comment
AS OF 26 Sep 2025Recommendation Reviewed:
Recommendation Changed:
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Fundamental View
AS OF 24 Jul 2025Krung Thai Bank is the 3rd largest bank by assets in Thailand, with a 55.07% state ownership through the Financial Institutions Development Fund. We see strong government support underpinning KTB’s underlying credit profile.
The state influence opens the bank up to potentially government-directed lending; it has secured an increasingly meaningful portion of banking business from government agencies and State Owned Enterprises, which underscored its one-notch upgrade by Fitch in Dec-21.
KTB was faced with asset quality challenges in the past and had the highest NPL ratio and restructured loans among the major Thai banks. It has since de-risked its loan book, and asset quality has proven to be more resilient than its peers with lower COVID-19 restructured loans.
Business Description
AS OF 24 Jul 2025- KTB is the 3rd largest bank by assets in Thailand. The Thai Financial Institutions Development Fund owns 55.07% of the bank, and has a free float of 44.93%.
- Being the largest state-owned bank, it secures a meaningful portion of banking business from government agencies and State Owned Enterprises (SOEs) and per the bank, is the preferred bank for the government and SOE employees.
- Though state owned, the bank runs on a commercial basis and is not considered as a policy bank.
- KTB's loan profile comprised 45% retail, 25% private corporates, 10% SME, and 20% Government & SOEs at June 2025.
Risk & Catalysts
AS OF 24 Jul 2025We see a significant impact to the Thai economy from potential US tariffs, with ripple effects in the form of lower bank NIMs and higher credit costs than earlier guided for this year. Moody’s also downgraded its rating outlook on the Thailand sovereign, and consequently the Thai banks including KTB, to negative on 29 April 2025, citing increased risks to Thailand’s economic and fiscal strength, partly due to the potential impact of new US tariffs.
NIM pressure is set to continue into the coming quarters on the back of rate cuts to support growth, exacerbated by KTB’s domestically and large corporates focused book. Loan growth will also remain middling across the Thai banks due to a focus on quality amid the current backdrop.
However, we take comfort in KTB’s conservative focus on the government agencies/SOEs segment, which is supporting asset quality well amid the challenging environment.
Key Metric
AS OF 24 Jul 2025| THB mn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| PPP ROA | 1.83% | 1.98% | 2.40% | 2.45% | 2.50% |
| ROA | 0.63% | 0.94% | 1.01% | 1.20% | 1.21% |
| ROE | 6.1% | 9.2% | 9.4% | 10.6% | 10.3% |
| Equity/Assets | 10.5% | 10.9% | 11.4% | 12.3% | 12.2% |
| CET1 Ratio | 15.6% | 15.6% | 16.5% | 17.9% | 18.3% |
| Calculated NPL ratio | 3.50% | 3.26% | 3.08% | 2.99% | 2.94% |
| Provisions/Loans | 1.31% | 0.93% | 1.43% | 1.18% | 1.23% |
| Gross LDR | 99% | 98% | 104% | 100% | 97% |
| Liquidity Coverage Ratio | 196% | 201% | 202% | 207% | n/m |
CreditSight View Comment
AS OF 22 Jul 2025KTB is the 3rd largest bank in Thailand by assets and the largest state-owned bank. It is 55% indirectly owned by the Thai government and thus secures meaningful business from government agencies and SOEs (~20% of total loans), which has undergirded its stable asset quality during and post-COVID; it was faced with asset quality challenges in the past, but fundamentals have improved as it de-risked its loan book. We see greater NIM pressure on KTB than most peers from the turn in base rates. We also see a significant impact to the Thai economy from potential US tariffs, with ripple effects in the form of lower bank NIMs and higher credit costs. The CET1 ratio though is solid at ~18% and the loan mix is safer than peers. We have it on M/P as the $ AT1 has <1 year to call date.
Recommendation Reviewed: July 22, 2025
Recommendation Changed: April 22, 2025
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Fundamental View
AS OF 24 Jul 2025Bangkok Bank is a family run conservative financial institution, with high capital and liquidity levels.
It acquired Indonesia’s Permata Bank in 2020 which resulted in a meaningful decline in its CET1 ratio to 14%. It is back to ~16% range and management aims to keep the CET1 ratio at ~16% in preparation for Basel III final reforms.
Profitability (ROA and ROE) has historically been below the industry average, due in part to higher exposure to the lower-yielding corporates segment that has resulted in a lower NIM. However, the returns gap has narrowed as this has supported its relatively better asset quality than most peers in a prolonged sluggish macroeconomic environment.
Business Description
AS OF 24 Jul 2025- Bangkok Bank was set up in 1944 and was listed on the Stock Exchange of Thailand in 1975. It is a family-run bank and the current President of the bank, Chartsiri Sophonpanich, is the grandson of the founder of the bank.
- It is the largest bank by assets in Thailand. It was briefly surpassed by Kasikornbank in 2018, but the Bank Permata acquisition has taken BBL back to No.1.
- The bank is corporate-loan focused, and the loan book was split 49% corporate, 16% SME, 12% retail, and 23% international as at June 2025. It is by far the most international amongst the Thai banks, with branches in 14 economies.
- BBL's overseas presence has been enhanced by the acquisition of Bank Permata, the 12th largest bank in Indonesia. Bank Permata's asset size is ~10% of that of BBL.
Risk & Catalysts
AS OF 24 Jul 2025We see a significant impact to the Thai economy from potential US tariffs, with ripple effects in the form of lower bank NIMs and higher credit costs than earlier guided for this year. Moody’s also downgraded its rating outlook on the Thailand sovereign, and consequently the Thai banks including BBL, to negative on 29 April 2025, citing increased risks to Thailand’s economic and fiscal strength, partly due to the potential impact of new US tariffs.
NIM pressure is set to continue into the coming quarters on the back of rate cuts to support growth. Loan growth will also remain middling across the Thai banks due to a focus on quality amid the current backdrop. However, we take comfort in BBL’s prudent provisioning, high loan loss buffers and safer large corporate book.
The acquisition of Bank Permata of Indonesia in May 2020 provides BBL with exposure to the high growth opportunities of the Indonesian market, but this also presents higher risks.
Key Metric
AS OF 24 Jul 2025| THB mn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| PPP ROA | 1.65% | 1.60% | 1.92% | 2.02% | 2.15% |
| ROA | 0.65% | 0.67% | 0.93% | 1.00% | 1.07% |
| ROE | 5.6% | 5.9% | 8.1% | 8.3% | 8.7% |
| Equity / Assets | 11.4% | 11.5% | 11.8% | 12.2% | 12.5% |
| CET1 Ratio | 15.2% | 14.9% | 15.4% | 16.2% | 16.7% |
| Calculated NPL ratio | 3.20% | 3.10% | 2.70% | 2.70% | 3.20% |
| Provisions / Loans | 1.38% | 1.24% | 1.26% | 1.30% | 1.47% |
| Gross LDR | 82% | 84% | 84% | 85% | 85% |
| Liquidity Coverage Ratio | 270% | 271% | 277% | 265% | n/m |
CreditSight View Comment
AS OF 22 Jul 2025Bangkok Bank’s strength has been its large corporate book and strong capital. It completed the acquisition of Indonesia’s Bank Permata (~12% of loans) in 2Q20 which reduced its CET1 ratio to 14%, but it has since rebuilt it to ~16%. Returns though have been lower due to thinner corporate margins, and we see greater NIM pressure on BBL than most peers from the turn in base rates. Disclosure from BBL is less than peers and bad loans jumped in 1H25. However, we take comfort in BBL’s strong loss buffers and large corporate book. We see a significant impact to the Thai economy and banks from potential US tariffs, with a bad tariffs outcome potentially leading to higher credit costs again. We have an Underperform rec.
Recommendation Reviewed: July 22, 2025
Recommendation Changed: April 22, 2025
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Search topics about wealth insights and investments.The Export-Import Bank of Korea
- Sector: Financial Services
- Sub Sector: Banks
- Region: Korea
- Bond: EIBKOR 5.125 33
- Indicative Yield-to-Maturity (YTM): 4.55%
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Fundamental View
AS OF 23 Jul 2025KEXIM is a pure policy bank that is directly and indirectly wholly owned by the government of the Republic of Korea, which is obliged under Article 37 of the Export-Import Bank of Korea Act to fund any losses that cannot be covered by the bank’s reserves.
While this is a solvency guarantee and does not explicitly guarantee the timely repayment of debt, we view it as inconceivable that the Korean authorities would fail to provide KEXIM with support in a timely manner, should this be needed, given its crucial policy role and close government links.
Business Description
AS OF 23 Jul 2025- KEXIM was set up in 1976 to support Korean companies in their overseas business through export credit guarantee programs, as well as providing finance for imports and for overseas investment. It provides funding for both short term trade and long term investment, and manages two government-entrusted funds: the Economic Development Cooperation Fund (EDCF), a Korean official development assistance program, and the Inter-Korean Cooperation Fund (IKCF), an economic cooperation program to promote exchanges with North Korea. It is also a conduit through which the government doled out COVID-19 assistance to affected companies.
- Till 2030, KEXIM aims to preferentially focus on seven sectors (hydrogen energy, wind and solar power, rechargeable battery and energy storage systems (ESS), future mobility, 5G and next-generation semiconductors, pharmaceutical and healthcare, and digital technology and cultural content) which are considered new growth drivers of the Korean economy. It has historically focused on the shipbuilding and engineering & construction industries.
- KEXIM is 100% owned by the Korean government: 76% directly and the remainder through stakes held by the Bank of Korea (7%) and Korea Development Bank (17%). In contrast to peer policy banks IBK and KDB, KEXIM has remained more consistently a policy bank but its role has been adjusted to ensure it complements rather than competes with the Korean commercial banks.
Risk & Catalysts
AS OF 23 Jul 2025Previous Korean governments have made moves to privatise the other policy banks, but KEXIM has retained its policy bank role and government ownership, which are not likely to change.
Korea’s shipbuilders have long been the largest users of KEXIM’s services. Losses on exposure to the sector, in particular Daewoo Shipbuilding (DSME), pushed KEXIM into the red in 2016 but the government injected capital and its condition has recovered.
Together with KDB, KEXIM has played a key role in helping corporate Korea survive the COVID-19 induced crisis.
Key Metric
AS OF 23 Jul 2025| KRW bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Pre-Impairment Operating Profit / Average Assets | 1.2% | 1.1% | 1.1% | 1.1% | 1.1% |
| ROAA | 0.1% | 0.5% | 0.4% | 0.6% | 0.8% |
| ROAE | 0.7% | 3.2% | 2.7% | 4.7% | 5.2% |
| Provisions/Average Loans | 1.2% | 0.5% | 0.8% | 0.3% | 0.1% |
| Nonperforming Loans/Total Loans | 1.8% | 1.9% | 1.2% | 0.7% | 0.9% |
| CET1 Ratio | 13.4% | 13.3% | 11.8% | 12.9% | 13.9% |
| Total Equity/Total Assets | 14.8% | 15.1% | 12.6% | 14.3% | 16.3% |
| Net Interest Margin (NIR/Ave Assets) | 0.9% | 0.9% | 0.9% | 0.7% | 0.6% |
CreditSight View Comment
AS OF 15 Sep 2025KEXIM is a wholly government owned policy bank benefiting from a Korean government solvency guarantee. It plays a key role in financing large-ticket exports in particular ships and large-scale overseas engineering projects. Its credit exposures include some industry and borrower concentrations especially to Korea’s shipbuilders and its financial performance has at times suffered. But the Korean government has always acted in a timely manner to endure its solvency, and with this strong backing we view it as a sound credit. We view its secondary levels as in line with where we would expect it to trade, and so continue with our Market perform recommendation.
Recommendation Reviewed: September 15, 2025
Recommendation Changed: September 22, 2020
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Fundamental View
AS OF 23 Jul 2025ICICI Bank is one of the leading private banks in India and has a good diversified business model, with well regarded life and general insurance subsidiaries.
Under its previous CEO, the bank suffered setbacks from sizeable bad debt problems in FY17/18, but the situation has since stabilised following a leadership change and the bank has done well ever since.
Business Description
AS OF 23 Jul 2025- The original Industrial Credit and Investment Corporation of India (ICICI) was established in 1955 by the World Bank, the Government of India and representatives of Indian industry as a financial institution to provide Indian businesses with medium and long-term project financing.
- In 1994, ICICI established a commercial banking subsidiary, ICICI Bank as India's financial sector opened up, and in 2002 ICICI merged with ICICI Bank, keeping the latter's name.
- Retail now accounts for 52% of its loan book, corporates are at 20%, while rural and business banking & SMEs are at 6% and 20% respectively, and overseas (which is being de-emphasised) consists of just 2% at F1Q26.
- The bank has well regarded life insurance (ICICI Prudential) and general insurance (ICICI Lombard) businesses.
Risk & Catalysts
AS OF 23 Jul 2025ICICI has been delivering both relatively strong loan and deposit growth momentum, while maintaining its leading LDR and profitability, in testament to its strong franchise. Rate cuts will impact the NIM in FY26, but treasury gains provide some offset. Loan growth has been slow for the sector as a whole despite improved system liquidity; the hope is for rate cuts to drive a pickup in loan growth.
We are cautious about Indian unsecured retail and microfinance given a stretched urban middle and lower-middle class consumer by earlier high inflation and interest costs. ICICI’s prudence towards the segment than peers however is keeping asset quality well controlled.
Leadership and governance issues under the previous CEO Ms. Chanda Kochhar have been dealt with well, since her replacement in Oct-18.
Key Metric
AS OF 23 Jul 2025| INR bn | FY22 | FY23 | FY24 | FY25 | 1Q26 |
|---|---|---|---|---|---|
| NIM | 3.96% | 4.48% | 4.53% | 4.32% | 4.34% |
| ROAA | 1.77% | 2.13% | 2.37% | 2.37% | 2.41% |
| ROAE | 14.7% | 17.2% | 18.7% | 17.9% | 17.2% |
| Equity/Assets | 12.1% | 12.6% | 12.7% | 13.7% | 14.3% |
| CET1 Ratio | 17.3% | 16.9% | 15.4% | 15.8% | 15.5% |
| Gross NPA Ratio | 3.60% | 2.81% | 2.16% | 1.67% | 1.67% |
| Provisions/Loans | 0.97% | 0.65% | 0.30% | 0.34% | 0.50% |
| PPP ROA | 2.97% | 3.28% | 3.36% | 3.37% | 3.54% |
CreditSight View Comment
AS OF 23 Jul 2025ICICI Bank is a preferred name among the Indian FIs we cover. We like the bank’s robust capital and loan loss buffers, strong asset quality, as well as peer leading margins, profitability and liquidity position. Under its previous CEO, the bank suffered setbacks from sizable bad debt problems in FY17/18 but the situation has since stabilised following a leadership change. The bank has emerged stronger from a capital, asset quality and earnings perspective, as it de-risked its book, and took pro-active actions to protect its capital by raising equity and selling small stakes in its well-regarded insurance subsidiaries to raise funds and set aside more general provisions. ICICI last issued a $ bond in 2017. The senior looks wide but we have ICICI on M/P due to likely low trading liquidity.
Recommendation Reviewed: July 23, 2025
Recommendation Changed: December 07, 2020
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Search topics about wealth insights and investments.Netflix Inc
- Sector: Media
- Sub Sector: Technology
- Region: US
- Bond: NFLX 4.875 30
- Indicative Yield-to-Maturity (YTM): 4.30%
- Credit Rating : A3/A/-
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Fundamental View
AS OF 22 Jul 2025Netflix is one of the few clear winners in the industry’s transition to streaming, and we believe the group’s leading position will be bolstered in 2025 as legacy media companies continue to rein in spending and international ambitions.
From a financial perspective, we expect Netflix will deliver ~30% EBITDA growth in 2025 driven by a mix of subscriber growth, price hikes and margin expansion.
Netflix’s financial policy is relatively conservative. While the company no longer targets $10-15 billion of gross debt, we view Netflix’s new financial policy as an evolution rather than a revolution and expect credit metrics to remain best in class.
Business Description
AS OF 22 Jul 2025- NFLX is the world's leading subscription streaming entertainment service with ~300+ mn paid streaming subs in 190+ countries around the world. NFLX's programming includes original & acquired TV series, documentaries and feature films.
- NFLX began expanding internationally with the launch of services in Canada (Sep 2010), followed by LatAm (Sep 2011), and the UK and Ireland (Jan 2012). NFLX launched services in 17 more markets at a measured pace through the end of 2015 before launching in the rest of the world in Jan 2016 (ex-China, N Korea, Syria, Crimea).
- As of FY24, Netflix's regional subscriber breakdown was as follows: (1) EMEA - 101.1 mn; (2) UCAN - 89.6 mn; (3) APAC - 57.5 mn and (4) LATAM - 53.3 mn.
- Ted Sarandos and Greg Peters are Co-CEOs, with Mr. Sarandos appointed to the position in July 2020 and Mr. Peters in January 2023. Co-founder Reed Hastings was appointed as executive chairman of the Board in January 2023.
Risk & Catalysts
AS OF 22 Jul 2025Market Saturation: Netflix is highly penetrated in the US market, so future growth will become increasingly dependent on price increases, uptake of the ad tier and success on the password sharing crackdown. The recent WWE and NFL deals also opens the door to higher-priced sports programming.
Increased Competition: Several large competitors including Amazon and Apple are increasingly leaning into DTC video offerings on a global basis. Heightened competition may result in rising churn & declining gross additions for NFLX.
M&A Risk: Netflix is in the early stages of an expansion into video games and has already acquired several studios. Additionally, several legacy media companies are weakly positioned and are actively considering asset sales. We believe Netflix has no interest in linear TV assets, but could be open to a studio purchase under the right circumstances.
Key Metric
AS OF 22 Jul 2025| $ mn | FY21 | FY22 | FY23 | FY24 | LTM 2Q25 |
|---|---|---|---|---|---|
| Revenue | 29,698 | 31,616 | 33,723 | 39,001 | 41,693 |
| Revenue YoY % | 18.8% | 6.5% | 6.7% | 15.6% | 14.8% |
| EBITDA | 6,806 | 6,695 | 7,650 | 11,019 | 12,905 |
| EBITDA Growth | 33% | (2%) | 14% | 44% | 39% |
| Cash Content Expense | 17,469 | 16,660 | 13,140 | 17,003 | 16,680 |
| CFO - CapEx | (132) | 1,619 | 6,926 | 6,922 | 8,501 |
| Dividends/CFO-Capex | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| LTM CFO-CapEx to Debt | (0.9%) | 11.3% | 47.6% | 44.4% | 58.8% |
CreditSight View Comment
AS OF 09 Sep 2025We believe Netflix’s premium valuation is justified given the group’s leading scale, operating momentum and credit metrics, which stand in stark contrast to the pressures facing legacy media peers. Netflix is one of the few clear winners in the industry’s transition to streaming, and we believe the group is on track to extend its leading position during a period of rising macro uncertainty since its legacy media competition is much more exposed to advertising market pressures. The company’s gross leverage is already best in class at ~1.1x, and we expect Netflix can generate ~$9 billion of FCF in FY25 with a FCF to debt ratio in the ~60% area. Netflix is also positioned to maintain its double-digit top line and profit growth in 2025.
Recommendation Reviewed: September 09, 2025
Recommendation Changed: October 20, 2022
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Fundamental View
AS OF 18 Jul 2025Delta’s focus on premium cabin and atlantic flying driven by its loyalty program lead the airline to enjoy industry best profitability. Delta targets 1x gross leverage, an A level balance sheet in our view.
Full-year guidance was reinstated at better-than-consensus levels with the 2Q earnings.
Delta has Outperformed peers this year on its strong credit quality and defensive nature. We are retaining our O/P view and continue to favor DAL compared to LUV. We are happy to capture the basis between the two.
Business Description
AS OF 18 Jul 2025- DAL is one of the world's largest airlines with a network comparable to UAL and AAL in size and distribution. It is perceived by the flying public as the "most premium" of the Big Three network carriers in the US.
- DAL has an extensive global network of airline affiliations, including Air France/KLM, Virgin Atlantic, Aeromexico, LATAM, and China Eastern.
- DAL management is the most evolved of the US network airlines, previously focused on used aircraft to lower capital costs and setting up full-cycle maintenance programs, buying a refinery to hedge crack spread, and developing non-commodity products including the leading loyalty program.
Risk & Catalysts
AS OF 18 Jul 2025DAL faces all the industry exogenous risks: geopolitical events, pandemics, oil price volatility, and now recessionary fears.
The recently weaker dollar may manifest as a headwind to international demand. DAL was able to capitalize on strong Atlantic recovery post-pandemic through its extensive existing network; however, it lost its status as the number one airline on US-Europe routes to United which grew very fast in the segment and now occupies the first spot.
The airline noted that demand winds have shifted swiftly after the tariff talks started to pick up. CEO Ed Bastian noted that there was a significant drop in demand, both for consumers in the main cabin and for business travelers. While the premium cabin is currently holding up, it remains to be seen if the recession fears will hit that demand segment as well.
DAL’s 1x leverage target is the lowest target in the industry.
Key Metric
AS OF 18 Jul 2025| $ mn | Y22 | Y23 | Y24 | LTM 2Q25 |
|---|---|---|---|---|
| Revenue | 50,582 | 58,048 | 61,642 | 61,924 |
| EBIT | 3,661 | 5,521 | 5,995 | 5,785 |
| EBITDAR | 6,276 | 8,394 | 9,056 | 8,820 |
| Cash | 3,266 | 2,741 | 3,069 | 3,331 |
| Short Term Investments | 8,412 | 10,061 | 721 | 8 |
| Net Debt | 16,634 | 16,269 | 13,151 | 11,730 |
| Adjusted Debt/LTM EBITDAR | 4.9x | 3.3x | 2.5x | 2.4x |
CreditSight View Comment
AS OF 18 Sep 2025Delta’s 2Q25 was yet another reminder of the power of its premium-driven business model. While competitors are pulling capacity, Delta is powering through, driven by strength in its premium segment. The Delta credit story remains intact, with $3bn of debt paydown on track for this year, on the way toward a 1.0x leverage target in the coming years. Delta’s measure of adjusted leverage was 2.5x, down 0.1x sequentially on debt retirement. We retain our Outperform view on Delta and continue to expect ratings upgrades into the A category as the company executes on its capital structure target. We still like the long Delta/short LUV trade, with a 15-20 bp basis.
Recommendation Reviewed: September 18, 2025
Recommendation Changed: April 12, 2024
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Search topics about wealth insights and investments.Sultanate of Oman
- Bond: OMAN 4.75 26
- Indicative Yield-to-Maturity (YTM): 4.46%
- Credit Rating : Baa3 / BBB- / BB+
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Country Overview
AS OF 08 Jul 2025- Oil-dependent economy with diversification efforts: While oil and gas remain the primary drivers of Oman’s economy, contributing significantly to GDP and government revenue, the country is actively pursuing economic diversification through its “Vision 2040” plan. This aims to boost non-oil sectors like manufacturing, tourism, logistics, agriculture, and fisheries.
- Positive growth driven by non-oil sectors: Oman’s GDP has shown growth in recent periods, largely propelled by the expansion of non-oil activities, including manufacturing, services, and construction, even amidst OPEC+ oil production cuts. Natural gas production is also a growing contributor.
- Fiscal reforms and debt reduction: The Omani government has implemented significant fiscal reforms, including a VAT and subsidy reductions, which have helped shift fiscal and external balances into surpluses since 2022. This prudent management has substantially reduced public debt, improving the country’s financial stability and investor confidence.
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Search topics about wealth insights and investments.Korea Electric Power Corp.
- Sector: Energy
- Sub Sector: Utilities
- Region: Korea
- Bond: KORELE 5.5 28
- Indicative Yield-to-Maturity (YTM): 4.858%
- Credit Rating : AA
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Fundamental View
AS OF 07 Jul 2025KEPCO is Korea’s only fully integrated electricity utility and is considered a quasi-sovereign credit, with its financial strength anchored by a very high level of government support stemming from its essential role in securing the nation’s power supply.
In FY24, KEPCO’s credit profile improved significantly due to higher tariffs and stabilizing fuel costs, driving strong rebounds in revenue, EBITDA margin, and cash flow. Credit metrics strengthened, with total debt/EBITDA and net debt/EBITDA improving to 6.7x/6.6x. Although capex remains substantial and continues to keep debt elevated, the stronger operating performance has provided a cushion. These factors, combined with KEPCO’s critical policy function and the strong likelihood of government support, underpin its solid credit standing.
Business Description
AS OF 07 Jul 2025- KEPCO is a quasi-sovereign credit and the sole integrated electric utilities company in Korea. It is majority-owned by the Korean government, which maintains at least a 51% stake as stipulated by law, with shares listed on both the Korea Exchange and the New York Stock Exchange.
- It is South Korea’s leading electricity utility, holding an effective monopoly over the country’s transmission and distribution networks and acting as the primary power generator. Through its six wholly owned generation subsidiaries - Korea Hydro & Nuclear Power (KHNP), Korea South-East Power (KOEN), Korea Western Power (KOWEPO), Korea East-West Power (EWP), Korea Midland Power (KOMIPO), and Korea Southern Power (KOSPO), KEPCO supplies around two-thirds of Korea’s electricity and manages more than half of the nation’s total power capacity. KHNP is the sole nuclear power generation company in Korea. On a consolidated basis, electricity transmission & distribution accounts for over 95% of KEPCO's annual revenues.
Risk & Catalysts
AS OF 07 Jul 2025Key risks to KEPCO’s standalone credit profile include: 1) higher-than-expected fuel costs due to continued increase of international prices of coal, natural gas and oil as well as a significant depreciation of the KRW against the $; (2) inability to pass through high fuel costs due to insufficient or delayed tariff adjustment; and (3) higher-than-expected capex and investments related to Korea’s green transition. However, we do not foresee these risks to materially impair KEPCO’s ability to access funding, credit rating and overall credit profile as we expect KEPCO to continue receiving an extremely high level of support from the Korean government.
KEPCO’s exposure to nuclear power operations and coal-fired power generation may post ESG concerns for investors with an ESG mandate. The company also faces challenges from Korea’s push for decarbonization, with tightening environmental regulations and a planned reduction in coal-fired power potentially increasing compliance costs and execution risks during the energy transition.
Key Metric
AS OF 07 Jul 2025| KRW bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 55.3% | 60.1% | 76.9% | 80.5% | 78.9% |
| Net Debt to Book Cap | 54.1% | 58.7% | 75.3% | 78.4% | 77.8% |
| Debt/Total Equity | 1.2x | 1.5x | 3.3x | 4.1x | 3.7x |
| Debt/Total Assets | 43.0% | 46.7% | 59.6% | 64.3% | 62.6% |
| Gross Leverage | 5.6x | 16.5x | -6.9x | 18.2x | 6.9x |
| Net Leverage | 5.5x | 16.1x | -6.8x | 17.7x | 6.8x |
| Interest Coverage | 7.8x | 3.1x | -7.2x | 1.9x | 4.8x |
| EBITDA Margin | 26.5% | 9.8% | (28.3%) | 9.6% | 23.9% |
CreditSight View Comment
AS OF 04 Sep 2025KEPCO is the sole electricity distributor and transmitter in South Korea, undertaking an irreplaceable policy role. Its credit profile is underpinned by excellent government support which allows the company to enjoy strong access to the onshore and offshore funding channels that mitigate its elevated leverage and insufficient cash coverage for short-term debt. KEPCO is in the process of implementing a financial improvement plan and aim to restore its financial soundness by 2027. Its $ bonds is attractive on a relative value basis compared to lower rated Asian A rated corporate, including the Chinese central SOEs.
Recommendation Reviewed: September 04, 2025
Recommendation Changed: July 24, 2023
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Fundamental View
AS OF 27 Jun 2025KORGAS is Korea’s sole integrated gas utility company and a quasi-sovereign credit, maintaining an effective monopoly over E&P, procurement, storage and production, transmission, and wholesale distribution of natural gas.
Its credit profile is supported by its dominant position in the natural gas and hydrogen utility market, as well as strong government support, which partially offsets the credit impact of delayed and incomplete pass-through of gas procurement costs during periods of natural gas price surges, such as in FY22.
We expect its credit profile to improve in FY25, aided by stabilizing oil and LNG prices, improved tariff adjustments, and ongoing government backing, which should partially mitigate concerns related to its larger planned capex.
Business Description
AS OF 27 Jun 2025- KORGAS is 54.6% owned directly/indirectly by the Korean government (Central Government 26.2%, KEPCO 20.5%, Local Government 7.9%). It is Korea's only fully integrated gas utility, holding an effective monopoly over E&P, procurement, storage, transmission, and wholesale distribution of natural gas. KORGAS plays a key role in Korea’s energy transition, with plans to increase LNG generation capacity by 56% by 2036 from 2022. KORGAS was also designated as Korea’s sole hydrogen distribution agency in 2020.
- The Korean natural gas sector is split into wholesale and retail segments. KORGAS is the exclusive wholesaler, while city gas companies manage retail supply via regional networks. In FY24, 46% of KORGAS's gas sales were to domestic LNG-fired power generation companies (gencos, including KEPCO subsidiaries and IPPs), with the remaining 54% sold to city gas and heating companies.
- KORGAS's operations are heavily regulated, with government oversight on tariffs, investments, and expansion. Besides domestic LNG, KORGAS owns overseas E&P assets to enhance energy security. In line with government policy, KORGAS is investing in hydrogen infrastructure and renewables, using its gas network and expertise to support Korea’s clean energy transition.
Risk & Catalysts
AS OF 27 Jun 2025Risks: (1) delayed tariff adjustments; (2) larger-than-expected debt-funded capex; (3) domestic regulatory and policy risks; (4) overseas E&P volatility, including political, operational and market risks; (5) depreciation of the KRW against the USD; (6) liquidity shortfalls; (7) asset impairment risks due to decline in global oil and gas prices.
Catalysts: (1) stronger-than-expected government support; (2) tariff increases; (3) stabilizing fuel prices; (4) hydrogen and green energy initiatives; (5) regulated city gas operations with a formula-based cost pass-through system.
Key Metric
AS OF 27 Jun 2025| KRW bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 75.7% | 75.8% | 81.3% | 80.7% | 79.0% |
| Net Debt to Book Cap | 74.6% | 74.2% | 79.8% | 79.1% | 77.2% |
| Debt/Equity | 312.4% | 313.3% | 434.4% | 418.0% | 377.0% |
| Gross Leverage | 9.4x | 9.1x | 9.9x | 11.6x | 8.0x |
| Net Leverage | 9.3x | 8.9x | 9.7x | 11.4x | 7.8x |
| Interest Coverage | 3.4x | 4.8x | 5.1x | 2.2x | 3.4x |
| EBITDA Margin | 12.3% | 11.4% | 8.8% | 8.0% | 13.3% |
CreditSight View Comment
AS OF 04 Sep 2025We maintain our O/P recommendation on KORGAS. Its credit profile is supported by its essential policy role as South Korea’s only vertically integrated natural gas utility and a key energy supplier, which results in strong government backing, a dominant market position, and excellent funding access—offsetting its high leverage. We anticipate its credit profile will strengthen in FY25, driven by stable oil and LNG prices, improved tariff adjustments, and continued government support, which should help address concerns over higher planned capex. We find KORGAS attractive relative to lower-rated Chinese SOEs, BBB-rated low beta Korean corporates, and other Korean quasi-sovereigns.
Recommendation Reviewed: September 04, 2025
Recommendation Changed: June 27, 2023
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