South Korean telco group KT Corporation plans to issue senior unsecured JPY notes in order to pay off maturing existing debt.
The yen-denominated bonds have been assigned A ratings from Fitch and Standard & Poor’s, according to statements from the…
South Korean telco group KT Corporation plans to issue senior unsecured JPY notes in order to pay off maturing existing debt.
The yen-denominated bonds have been assigned A ratings from Fitch and Standard & Poor’s, according to statements from the ratings agencies today.
The notes have a negative pledge clause, but Fitch said that “as is common in Korean global bond issuance”, this does not protect bondholders from subordination to future Korean won-denominated offerings or any debt which matures within a year from the date of issue.
No announcements have yet been made regarding the amount, interest or yield of the offering.
The telco, which is listed in Korea, London and New York, has a leading position in Korea’s telecoms market. However, both rating agencies warned of possible negative rating actions due to fierce competition in the country.
Standard & Poor’s gave KT a negative outlook, which it said “reflects our expectation that a weak operating environment in Korea’s telecommunications industry will pressure KT’s operating performance over the next one to two years.”
Fitch said that it did not expect KT’s operating margins to improve this year due to telecom operators’ “aggressive marketing policies” to expand their long term subscriber base.
Fitch also forecast that the telco’s net debt would continue to decline in 2013, partly due to reduced capex. “However, if KT makes a sizable debt-funded acquisition to expand its geographical footprint, or to diversify its business portfolio, this would result in a negative rating action,” added the statement.
As TelecomFinance reported last month, KT announced that it is considering buying a stake in a Moroccan telco. KT did not name the target company, but it had been previously reported that the telco was considering a bid for Vivendi’s controlling stake in Maroc Telecom.
