(The following statement was released by the rating agency)SEOUL/SINGAPORE, October 10 (Fitch) Fitch Ratings has assigned Korea Gas Corporation's (Kogas, AA-/Stable) five-and-a-half year EUR500m notes a final senior unsecured rating of 'AA-'. The bond was issued under the company's Global Medium-Term Note program, which is also rated 'AA-'. The assignment of the final rating follows the completion of the bond issuance and receipt of documents conforming to the information previously received. The final rating is the same as the expected rating assigned on 8 October 2013. KEY RATING DRIVERSRatings Equalised with Sovereign: The ratings of Kogas are equalised with Korea (AA-/Stable) due to strong strategic and operational ties. The ratings also reflect Kogas' status as an important state-owned enterprise in the country with a dominant position in the natural gas business through its monopoly in the wholesale gas segment and its ownership of the country's entire gas transmission infrastructure. Favourable Operating Environment: Fitch views the resumption of the Automated Fuel Cost Passthrough System as a credit positive for Kogas. The government indicated that Kogas could restart the system in February 2013, which would allow the company to adjust the gas tariff every two months if costs move by more than 3% in either direction. Although no tariff adjustments have been made yet, timely changes to charges arising from this framework will lead to more stable revenue and cash generation. Government Equity Injection: The government will participate in Kogas' planned recapitalization and acquire KRW160bn of new shares. The company expects to raise around KRW700bn from new share issuance, which will likely alleviate some of its funding pressures stemming from plans to invest in overseas assets (KRW3trn in 2013). The government's decision to support Kogas' equity raising reflects the company's key role in the government's policy of increasing national energy resources. Growing Upstream Operation: Kogas is actively seeking investment opportunities in overseas exploration and production (E&P) assets to support the government's policy of improving the country's energy self-sufficiency. For example, Kogas owns 10% in a Mozambique gas field, in which additional gas resources continue to be discovered. Reserves for the operation have reached an estimated 87 trillion cubic feet. Although these overseas projects carry higher execution risk than Kogas' domestic gas business, a higher vertical integration into production reduces the company's exposure to gas price volatility in the long term. Standalone Credit Profile Improves: Kogas' debt increased to KRW27trn in 2012 from KRW23trn in 2011. Its leverage metrics have remained high, with FFO-adjusted net leverage of 10.9x at end-2012. However, we expect this ratio to improve (albeit marginally) on the back of the proposed recapitalisation plan, the tariff increase and the possible disposal of some non-core assets. Kogas' liquidity remains strong, underpinned by the company's close ties with the government, which gives the company good access to banks and debt capital markets.RATING SENSITIVITIESNegative: Future developments that may, individually or collectively, lead to a negative rating action- A negative rating action on the sovereign.- The government's inability to curtail the rate of increase in public-sector entities' debt, resulting in challenges to the state's ability to provide timely and adequate support to key public-sector entities.- Weakening of linkages with the state.Positive: Future developments that may, individually or collectively, lead to a positive rating action- A positive rating action on the sovereign, provided that the rating linkages between Kogas and the state remain intact and that the state's ability to support key state-owned entities remains strongContact: Primary AnalystShelley JangAssociate Director+82 2 3278 8370Fitch Ratings Limited, Korea Branch9F Kyobo Securities Building26-4 Youido-Dong, Youngdeungpo-GuSeoul, Republic of KoreaSecondary AnalystJeong Min PakSenior Director+82 2 3278 8360Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com; Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com.Additional information is available on 
  www.fitchratings.com.
 Applicable criteria, "Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage", dated 5 August 2013, is available at 
  www.fitchratings.com.
  Related research: "Korean State-Owned Enterprises - Credit Profiles Stabilising; State Support Underscores Ratings" dated 10 September 2013.Applicable Criteria and Related Research: Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage
  http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=715139
 Additional Disclosure Solicitation Status 
  http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=804711
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