Korea Water Resources Corp. said Tuesday that it has received 119 billion won ($104 million) from the Ministry of Strategy of Finance to repay its debt for the construction and restoration of Korea’s four major rivers.
The government agreed last September to provide a total of 340 billion won this year to the state-run K-water for debt repayments.
The state-run water resources manager said that the 119 billion won was the first capital support from the Finance Ministry, and the rest of the 340 billion won will be given to the company on a quarterly basis, depending on the status of Korea’s tax revenue and market conditions.
K-water began its annual debt repayment last year when it set a goal to pay back some 200 billion won in principal to its bond investors. The company issued long-term bonds worth some 7.8 trillion won to finance the rivers projects, which took place from 2009-2014.
“We are aiming to repay the 7.8 trillion won debt with interest over the next 22 years, with the government set to provide capital for debt financing over the next 16 years,” a K-water accountant said.
The funds from the government will be recorded as an increase in shareholders’ equity in the company’s balance sheet, the accountant noted.
The government’s liquidity support to K-water’s debt accounts for about 30 percent of the total, while the remaining 70 percent of the financing will come from the company. Under the law, the government has the obligation to finance 30 percent of public projects such as the four rivers restoration, K-water noted.
Bonds issued by K-water for the rivers project do not pose a risk to investors as state-run companies’ debts are graded the same as countries’ sovereign credit ratings. Last year, Moody’s upgraded Korea’s credit rating from “Aa3,” with a positive outlook to “Aa2” with a stable outlook.
“These bonds are perceived to be safe as long as there is a very low chance of Korea going broke,” said the K-water accountant.
By Park Hyong-ki (hkp@heraldcorp.com)