Koramco Earns 'A·Stable' Ratings from Top Two Credit Agencies... Maintains Industry's Highest Grade for 9 Consecutive Years

Corporate Credit Rating Maintained at 'A·Stable'
Commercial Paper at 'A2'

Koramco Asset Trust announced on July 8 that it received a corporate credit rating of 'A' with a 'Stable' outlook in the regular evaluations by NICE Investors Service and Korea Ratings·KR.

The company also maintained an 'A2' rating for its commercial paper from both agencies. With this, Koramco Asset Trust has held the highest credit rating in the trust industry according to NICE Investors Service for nine consecutive years.

Recently, the real estate trust industry has faced a series of credit rating downgrades due to a combination of delayed recovery in the real estate market, pressure from the recovery of trust account loans, and the materialization of contingent liabilities from completion-guaranteed land trusts. The slow recovery of projects involving the company's own capital, rising credit loss expenses, and increased borrowing costs have put simultaneous pressure on both profitability and financial stability.

Despite this market environment, Koramco Asset Trust has maintained stability through a business portfolio centered on REITs and conservative trust business operations. The company secures stable recurring income through asset management fees from REITs, dividend income, and fees related to acquisitions and sales. In its trust business, it is diversifying its business structure by focusing on selective orders for urban redevelopment projects and expanding collateral trusts, management-type land trusts, and agency services. While limiting new orders for completion-guaranteed land trusts, the company is managing potential losses by simultaneously recovering existing projects and setting aside provisions.

Credit rating agencies cited this business structure and financial management capability as the core reasons for maintaining the rating. NICE Investors Service highlighted Koramco's stable business foundation, profit generation capability centered on REITs, and reduced financial burden through profit accumulation and capital expansion. Korea Ratings·KR also pointed to the REITs-centered portfolio, a relatively stable profit structure compared to competitors, and the potential to maintain sound financial stability as key evaluation factors.

Additionally, last month Koramco was consecutively selected as the preferred negotiator for domestic real estate blind fund management by both the Government Employees Pension Service and Korea Post, securing an additional investment fund of approximately 1 trillion won.

Koramco Asset Trust is also showing improvement in terms of financial stability. As of the end of March this year, its equity capital stood at 521.3 billion won, with a debt ratio of 27.9%. The debt ratio has improved from 41.7% at the end of 2022 to 31.0% at the end of last year, and further improved in the first quarter of this year. Credit rating agencies assessed that, considering proactive provisioning, enhanced capital buffer, and short-term liquidity management, asset quality and financial stability remain at an excellent level.

Seunghoe Jung, CEO of Koramco Asset Trust, stated, "Recent changes in credit ratings within the trust industry show that risk management and delivering predictable investment returns are becoming more important criteria than mere external growth. Koramco is reinforcing a stable income base centered on REITs, while selectively winning trust business orders focused on general management and collateral trusts to manage exposure to risk assets."

He added, "As market volatility increases, capabilities in investment structure design, asset management, and recovery processes become increasingly important. Based on a stable financial structure and strict internal controls, Koramco will establish itself as the most trusted real estate finance company for investors."

This content was produced with the assistance of AI translation services.