Issuer Summary: KEPCO / Korea Electric Power Corporation

Date prepared: 2026-05-12

1. Business Snapshot and Recent Developments

KEPCO, meaning Korea Electric Power Corporation in this report, is South Korea’s core government-related electric utility, encompassing transmission and distribution, electricity sales, and major generation subsidiaries. It should not be viewed simply as a generation company or as a purely private regulated utility, but as an issuer embedded in South Korea’s power supply system itself. According to the Form 20-F as of December 31, 2025, KEPCO and its generation subsidiaries owned approximately 53.4% of South Korea’s total generation capacity, and electricity sales in 2025 were 549,417 GWh. The company generates a substantial portion of domestic power through six wholly owned generation subsidiaries, while the parent company is responsible for transmission, distribution, and sales. For bond investors, the primary question is how far KEPCO’s hard-to-substitute role in South Korea’s power supply and expectations of government support can absorb tariff-system delays, fuel and purchased power costs, FX, large debt, and capital expenditure burdens.

The issuer’s defining feature is the simultaneous presence of strong public-sector importance and standalone earnings volatility as a listed company. The government-related block owns 51.10%, consisting of the South Korean government at 18.20% and Korea Development Bank at 32.90%, and KEPCO has a policy role under the KEPCO Act. At the same time, because KEPCO has listed shares, including NYSE ADRs, and private shareholders, it should be assessed not as a government agency itself, but as a public enterprise controlled by the government and funded through capital markets.

The most important recent change is the clear recovery in earnings in 2025. In the FY2025 Form 20-F MD&A presentation, sales were KRW 96,568 bn and net profit was KRW 8,667 bn, improving from 2024. The FY2025/Q4 preliminary 6-K filed on February 26, 2026 showed operating profit of KRW 13,525 bn, total liabilities of KRW 205,737 bn, and total equity of KRW 49,365 bn. Although there are differences in presentation line items, it is confirmed that earnings recovered materially in 2025 from the stress caused by high fuel costs and delayed tariff pass-through in 2021-2023.

That said, the 2025 improvement should be treated not as “the problems have disappeared,” but as “post-stress recovery has been confirmed.” At end-2025, total liabilities were KRW 205.7 tn, current financial liabilities were KRW 45.9 tn, and the working capital deficit was KRW 36.4 tn, while capital expenditure and refinancing needs also remain large. The tariff system supports cost recovery over the long term, but because of fuel cost adjustment lags, adjustment limits, and policy decisions, KEPCO is likely to bear cost increases first in the short term.

As of May 12, 2026, the latest financial results material confirmed on the official IR Resources page was the 2025.Q4 Earnings Results dated February 26, 2026, and FY2026 Q1 results are not yet incorporated into this report. SEC filings also confirmed the KENTECH contribution dated March 30, 2026 and the extraordinary general meeting results dated April 27, 2026, but these are not major factors changing this report’s credit view.

2. Industry Position and Franchise Strength

KEPCO’s business base is supported less by competitive advantage than by institutional indispensability. Electricity demand in South Korea is basic infrastructure for industry, commerce, and households, and while affected by the economy and temperature, it is unlikely to decline sharply. KEPCO serves this demand through its nationwide transmission and distribution network and sales function, delivering power purchased from generation subsidiaries and independent power producers to customers.

Electricity sales in 2025 were 549,417 GWh, slightly down from 549,821 GWh in 2024. Industrial sales were the largest category at 280,221 GWh, down 2.1% YoY, while commercial sales increased to 138,315 GWh and residential sales to 88,474 GWh. The revenue base is linked to electricity demand across the Korean economy, while demand by usage category and tariff differences affect earnings quality.

KEPCO Group’s institutional importance is also high in terms of generation capacity. According to the Form 20-F, KEPCO and its generation subsidiaries owned approximately 53.4% of South Korea’s total generation capacity at end-2025. Of the 545,192 GWh of electricity purchased by KEPCO in 2025, 33.2% was supplied by wholly owned Korea Hydro & Nuclear Power, 32.7% by the five wholly owned non-nuclear generation subsidiaries, and 34.1% by independent power producers through the cost-based electricity trading market. Because KEPCO combines intra-group generation and external procurement, its earnings depend not only on sales tariffs, but also on purchased power unit costs, generation mix, nuclear utilization rates, thermal fuel prices, and procurement prices from independent power producers.

This business base is a credit strength. KEPCO has a broad customer base, and interruption of power supply would have a major impact on households, industry, and the government, giving the government a strong incentive to maintain KEPCO’s credit. The transmission and distribution network is a long-term asset, and as the power generation transition and distributed generation advance, the importance of grid operation, T&D investment, and connection management is likely to rise rather than fall. Electricity sales revenue is large and forms the foundation for ordinary-course operating cash flow.

On the other hand, franchise strength should not be equated with margin stability. KEPCO has a strong demand base, but it cannot freely determine its sales prices. The tariff system and fuel cost adjustment mechanism are, in credit analysis, both the channel through which government support reaches operating revenue and a key constraint that can destabilize standalone financials.

3. Segment Assessment

KEPCO’s segments include the parent company’s transmission, distribution, and sales; Korea Hydro & Nuclear Power, which handles nuclear and hydro; five non-nuclear generation subsidiaries; generation maintenance and engineering; nuclear fuel; information and communications; and overseas operations. For credit analysis, rather than decomposing profit centers, it is more important to distinguish between functions that support stability within the power supply system and functions that increase cost volatility and capital burden.

The parent company’s transmission, distribution, and sales function is the entry point for repayment resources from electricity sales revenue received from customers. On the other hand, it is likely to be the first to bear the lag before fuel costs and purchased power costs are passed through to sales tariffs, so the durability of tariff collection and funding functions is the central issue for parent-company bonds.

The nuclear and hydro segment contributes to group cost stability as a low-fuel-cost power source. KHNP handles nuclear, hydro, and renewable energy, but it is also affected by safety regulation, utilization rates, long-term maintenance, decommissioning, spent fuel, and policy direction.

The non-nuclear generation segment includes coal, LNG, other thermal power, and renewable energy, and is exposed to fuel costs, carbon policy, and environmental regulation. It demonstrates depth of supply capacity, while keeping fuel, environmental, and capital expenditure risks inside the group.

The most important point in this segment structure is that revenue sources and debt burden are not located in exactly the same place. Generation subsidiaries hold important power sources and revenue sources, but claims under parent-company bonds follow the issuer and guarantee provisions of each individual bond. The policy importance of the overall group strengthens expectations of government support, but bondholders should confirm before investment which legal entity they have a claim against and how the parent can capture subsidiary cash flow.

4. Financial Profile and Analysis

KEPCO’s financial profile is one in which earnings recovered materially in 2025, while debt, liquidity, and capital expenditure burdens remain heavy. When assessing the 2025 recovery, it is necessary to look not only at increases in revenue and profit, but also at operating cash flow, investing cash flow, the working capital deficit, current financial liabilities, and interest payments. As a utility, KEPCO has a strong demand base and strong expectations of government support, but its standalone financials have fluctuated substantially over the past several years due to fuel costs, purchased power costs, and the tariff system. Therefore, although 2025 profit is a clear positive for credit quality, it does not by itself indicate sovereign-level standalone financial capacity.

The FY2025 earnings improvement was supported not by a large increase in demand volume, but by higher electricity sales tariffs and improvement in the fuel and purchased power cost environment. The Form 20-F explains that electricity sales revenue in 2025 was KRW 95,168 bn, up from KRW 91,019 bn in 2024. Because electricity sales volume declined slightly, the central driver of revenue growth was the average selling price. Fuel costs decreased by 13.8% from KRW 22,538 bn in 2024 to KRW 19,436 bn in 2025. This had a major positive impact on earnings improvement, but also indicates that a future re-rise in fuel costs could push earnings back down.

Note: Sales and net profit primarily use Form 20-F MD&A comparative figures. Operating profit includes the FY2025/Q4 preliminary 6-K presentation. The audited 6-K sales presentation total is KRW 97,429 bn, and differs in line-item scope from the Form 20-F MD&A presentation. Liabilities/equity is calculated in this report. Operating cash flow, investing cash flow, financing cash flow, and working capital deficit are based on the Form 20-F liquidity discussion.

The most important point in this table is that while operating cash flow increased to KRW 20,880 bn in 2025, investing cash flow was an outflow of KRW 18,445 bn, and the working capital deficit expanded to KRW 36,392 bn. Recovery in operating earnings improves debt repayment capacity, but as a capital-intensive utility, ongoing investment is large, and working capital needs linked to short-term debt, payables, and fuel procurement remain. Viewed only by earnings, KEPCO is a recovering company; viewed through cash flow and liquidity, it remains a refinancing-type issuer supported by high ratings and market access.

The interest burden should not be overlooked. Interest paid in 2025 was KRW 4,393 bn, which is absorbable in a phase where operating profit recovered to KRW 13,525 bn. However, if operating profit turns negative as in 2023, interest payments would strongly pressure earnings and cash flow. High ratings and expectations of government support are likely to keep funding costs contained, but because the absolute amount of debt is large, increases in interest rates, KRW depreciation, deterioration in foreign-currency bond issuance terms, and changes in domestic bond market supply-demand can have cumulative effects.

Overall, KEPCO’s standalone credit profile is best read as that of a “large utility in recovery.” 2025 profit reinforces support-inclusive credit stability, but given large debt, delayed tariff recovery, short-term financial liabilities, and investment burden, the credit assessment cannot be completed on standalone financials alone.

5. Structural Considerations for Bondholders

For bondholders, the structural issues are to distinguish the strength of government support, the presence or absence of legal guarantees, the relationship between parent and subsidiaries, and the covenants of individual bonds. KEPCO is a government-related issuer, and expectations of support are strong given its policy importance and ownership structure. However, strong support expectations and explicit government guarantees on all debt are not the same. When assessing a specific bond, investors need to confirm whether the issuer is the KEPCO parent, a subsidiary, or an SPV, whether there is a guarantor, and what the collateral, subordination, cross-default, and change-of-control provisions are.

The KEPCO Act provides an important legal support channel. Article 16(4) of the Act provides that the government may guarantee principal and interest repayment on KEPCO bonds. This means there is institutional room to issue government-guaranteed bonds under deep stress. However, this provision is a legal basis stating that the government “may guarantee,” and does not mean that “all ordinary debt is automatically government-guaranteed.” This report clearly separates government ownership, policy importance, guarantee capacity, actual guarantees on individual bonds, and government support incorporated by rating agencies.

Government support channels should be considered by stress level. In ordinary conditions, the main support channels are tariff revisions, fuel cost adjustments, the total cost recovery principle, and electricity sales revenue. In other words, government support reaches operating revenue through the tariff system, rather than through direct capital injections. Under liquidity stress, high ratings, majority government ownership, domestic and overseas bond markets, bank borrowings, and the policy finance ecosystem including KDB support refinancing capacity. Under deep stress, tariff normalization, capital policy, funding with strong government involvement, government-guaranteed bonds under the KEPCO Act, and capital injections become issues.

The relationship between the parent and subsidiaries is also important. KEPCO parent functions as the institutional center of the group, covering transmission, distribution, sales, funding, and the overall group. Meanwhile, generation functions such as nuclear and thermal power are divided among subsidiaries. Generation subsidiaries hold important assets and revenue sources and increase the policy importance of the overall group, but whether parent-company bondholders’ claims directly reach subsidiary assets depends on guarantees, collateral, obligors, and contractual terms. Analysis of parent-company bonds requires looking simultaneously at the group’s indispensability and the parent’s standalone funding and debt repayment capacity.

For partially privatized government-related issuers, the government link is both a basis for support and a source of policy burden. Tariff restraint and investment requests may also occur, so bondholders need to assess proximity to the government from both the support and burden perspectives.

6. Capital Structure, Liquidity and Funding

KEPCO’s capital structure and liquidity combine strong market access with large funding needs. High ratings, indispensability in domestic power supply, and the government-related ownership structure including KDB support funding. However, at end-2025, total liabilities were KRW 205,737 bn, current financial liabilities were KRW 45,939 bn, and the working capital deficit was KRW 36,392 bn, so short-term liquidity cannot be assessed by cash alone.

Cash and cash equivalents at end-2025 were KRW 2,241 bn, small relative to current financial liabilities of KRW 45,939 bn. Current financial liabilities consisted of borrowings of KRW 18,722 bn and bonds of KRW 27,165 bn, making short-term refinancing and repayment management important. Operating cash flow recovered to KRW 20,880 bn, but the structure is not one in which one year of operating cash flow can fully absorb short-term financial liabilities.

The most important question in liquidity analysis is how much of the operating cash flow recovery can be used for investment spending and debt reduction. Investing cash flow in 2025 was an outflow of KRW 18,445 bn, absorbing most of operating cash flow. T&D networks, nuclear and renewable energy, grid stabilization, and decarbonization investment maintain the business base, but they pressure free cash flow over the short to medium term.

Refinancing capacity is strongly supported by government support expectations and market access. On KEPCO’s official credit rating page, the company has high international ratings of Moody’s Aa2, S&P AA, and Fitch AA-, and it is recognized by overseas investors through its NYSE ADR and SEC disclosure. In the domestic market, it appears to have a deep investor base as a Korean government-related issuer. Under deep stress, the institutional channel of government-guaranteed bonds under the KEPCO Act also becomes relevant. However, ordinary bond refinancing cannot be described as equivalent to direct government debt. Even if markets incorporate expectations of government support, the legal guarantee of a specific bond must be confirmed in its contract.

The liquidity conclusion is that KEPCO maintains funding not through cash balances alone, but through a combination of government-related high ratings, market access, electricity sales revenue, the tariff system, and policy finance. Refinancing capacity under ordinary conditions appears high, but because maturity concentration, committed lines, foreign-currency debt, and hedging are unverified, a more precise assessment of liquidity headroom is a next-update item.

7. Rating Agency View

KEPCO’s ratings are high and difficult to explain through standalone financials alone. KEPCO’s official credit rating page shows international ratings of Moody’s Aa2, S&P AA, and Fitch AA-. This indicates that despite the company’s large losses in 2021-2023 and substantial debt as of end-2025, its government-support-inclusive credit quality is assessed as very strong. In reading the ratings, it is necessary to distinguish standalone credit quality, uplift from government support, linkage to the sovereign rating, and whether individual bonds have guarantees.

The 2024.11, 2024.12, and 2025.06 dates in the table are the latest dates shown in each rating agency column on KEPCO’s official credit rating page, while 2025-09-04 is the date managed in source_registry as the last update date for that page. This report reads the high international ratings shown on the official page as evidence of strong support-inclusive credit quality, but leaves a strict same-date comparison with South Korea’s sovereign ratings as an unverified item.

The rating level provides a basis for viewing KEPCO’s default risk as low, but it does not mean that standalone financials are at the same rating level. Ratings of government-related issuers incorporate public importance, government ownership, support track record, the government’s support capacity, sovereign rating, willingness to support, and legal/institutional relationships. In KEPCO’s case, the indispensability of power supply, majority government/KDB ownership, the tariff system, and the guarantee capacity under the KEPCO Act are central to support assessment. Therefore, when using rating agency views in this report, the rating itself should not be used as a substitute for one’s own credit judgment; it is necessary to explain which support assumptions the rating depends on.

The most direct downgrade risk is deterioration in South Korea’s sovereign rating or sovereign outlook. Given the high international ratings on the official rating page, KEPCO is likely to be treated, on a support-inclusive basis, as a quasi-sovereign close to the Korean sovereign, so deterioration in sovereign credit quality would likely affect KEPCO as well. The next key risk is a decline in government support assessment. If government ownership falls, tariff-system transparency deteriorates, loss recovery is delayed for an extended period, capital injection or tariff revisions prove insufficient, or public utility tariff policy becomes excessively politicized, rating agencies may reassess the likelihood or timeliness of support.

Standalone financial deterioration also cannot be ignored for ratings. For an issuer with strong government support, short-term earnings weakness does not necessarily lead immediately to a downgrade. However, if losses become prolonged, total liabilities increase, and the tariff system or government support fails to catch up, deterioration in standalone credit quality could emerge as a constraint on government support assessment or ratings. The 2025 earnings recovery should be read less as an upgrade factor than as confirmation that the tariff recovery and support logic underlying maintenance of high ratings has functioned.

Upgrade potential is limited. KEPCO is already in a high-rating area on a support-inclusive basis, so even if standalone earnings improve, the room for a large increase beyond sovereign constraints is small. For investors, the key issues are the stability of the high support-inclusive rating and how volatility in standalone financials is reflected in issuance terms and investor demand.

8. Credit Positioning

KEPCO’s credit position within Korean quasi-sovereigns is one where business and tariff risk are larger than for policy banks, while government support is stronger than for private utilities. Policy banks such as KDB and KEXIM are seen more directly as government policy implementation institutions, and the directness of government support is very high. By contrast, KEPCO is a listed company, and its operating earnings are affected by the tariff system, fuel costs, purchased power costs, FX, and capital expenditure. Even with similarly high ratings, it does not have the same risk profile as policy banks.

Within Korean energy quasi-sovereigns, comparisons with Korea Gas Corporation (KOGAS/KORGAS) and Korea National Oil Corporation (KNOC) are important. KOGAS is a government-related energy infrastructure company responsible for LNG and gas supply, with gas tariff pass-through, LNG procurement, and receivables as key issues. KNOC is responsible for oil development, stockpiling, oil distribution improvement, and energy security, with oil prices, overseas upstream assets, asset impairments, and policy finance support as key issues. KEPCO’s central issues are electricity tariffs, fuel cost adjustment, purchased power costs, T&D investment, and the generation mix of its generation subsidiaries.

In comparison with generation subsidiaries such as KHNP, KEPCO is positioned as the group parent and institutional center. The subsidiaries have generation assets and operating functions and directly bear the business risks of nuclear and thermal power. KEPCO parent, by contrast, is the center of transmission, distribution, sales, and funding, and ties group credit together through the tariff system and market access. When assessing relative value between parent bonds and subsidiary bonds, investors need to distinguish issuer, parent-subsidiary relationship, guarantees, debt balance, business risk, issuance volume, and liquidity.

When investors compare KEPCO in practice, the key axes are directness of support, standalone financial volatility, mechanical nature of tariff pass-through, sensitivity to fuel and commodity prices, presence or absence of legal guarantees, bond covenants, currency, maturity, and liquidity. KEPCO is one notch lower than policy banks in directness of support, but very strong in terms of indispensability for electricity supply.

9. Key Credit Strengths and Constraints

This section treats KEPCO not only as an ordinary utility, but also as a government-related enterprise. Credit strengths arise not only from demand base and tariff revenue, but also from government/KDB ownership, policy importance, the tariff system, policy finance, and support expectations incorporated by the market. At the same time, proximity to the government can also create constraints through tariff restraint, policy investment, and the presence or absence of individual bond guarantees, so it is necessary to separate support expectations, standalone financials, policy burden, and actual guarantee provisions.

The largest factor supporting KEPCO’s credit quality is its hard-to-substitute role in South Korea’s power supply. Group functions including transmission and distribution, electricity sales, and generation subsidiaries are directly related to citizens’ lives and industrial activity. Stable power supply is a key policy issue for the government, and disruption to KEPCO’s funding or business continuity would have major economic, social, and political consequences. This indispensability is the foundation of government support expectations.

The second support factor is majority ownership by the government and KDB and high ratings. The 51.10% government-related block indicates policy involvement different from that of ordinary shareholders. The official ratings of Moody’s Aa2, S&P AA, and Fitch AA- support domestic and overseas market access, refinancing capacity, and the investor base. Even if short-term earnings deteriorate, investors are likely to expect government support, tariff recovery, and the policy finance ecosystem.

The third support factor is the presence of the total cost recovery principle in the tariff system. Electricity tariffs are in principle set with consideration of total costs, fair return, and fairness. This indicates that losses are not permanently left unresolved, and can recover over time through tariffs, fuel cost adjustment, and system operation. The 2025 earnings recovery confirmed that this support channel can in practice lead to earnings improvement.

The largest constraint, however, is that the tariff system and fuel cost adjustment are not immediate and complete cost pass-through. When costs rise first, KEPCO temporarily bears the burden in earnings and working capital due to institutional lags, adjustment limits, non-adjusted areas, and MOTIE/MOSF decisions.

The second constraint is the absolute amount of debt. Total liabilities were around KRW 205.7 tn at end-2025, and current financial liabilities were KRW 45.9 tn, so the balance sheet remains heavy even after earnings recovery. Total equity has increased and liabilities/equity has improved, but given capex, interest payments, short-term refinancing, and redemptions, several years of sustained earnings and capital recovery are needed. High ratings make refinancing likely, but refinancing dependence itself remains.

The third constraint is policy burden and long-term investment. Strengthening the T&D network, nuclear power, renewable energy, thermal transition, distributed generation readiness, grid stabilization, decarbonization, and renewal of aging facilities are necessary for stable electricity supply and policy goals. However, these items pressure free cash flow and delay debt reduction. As a government-related issuer, KEPCO cannot restrict investment purely on the basis of economic rationality.

Overall, KEPCO has strong credit support on a government-support-inclusive basis, but the ceiling on standalone credit quality is constrained by the tariff system and debt. Government support should be emphasized in assessing default risk, while standalone earnings, tariff revisions, fuel costs, short-term financial liabilities, and the working capital deficit need continued monitoring when assessing spreads, issuance terms, rating comments, and whether to continue holding the bonds.

10. Downside Scenarios and Monitoring Triggers

The most realistic downside is a combination of renewed increases in fuel and purchased power costs and delayed tariff revisions. If LNG, coal, oil, SMP, electricity purchase prices from independent power producers, and the KRW exchange rate deteriorate while tariff revisions and fuel cost adjustments are delayed, the impact would flow sequentially through operating profit, operating cash flow, working capital, short-term borrowings, and interest-payment capacity. The expansion of losses in 2021-2023 showed that this channel remains present.

The second downside is a case in which investment burdens increase while debt reduction fails to progress. If T&D network strengthening, renewal of aging facilities, nuclear and renewable energy, decarbonization, distributed generation readiness, and grid stabilization investments continue to absorb operating cash flow, total liabilities and current financial liabilities will remain elevated. Even if refinancing is possible due to high ratings, an environment of rising interest rates would increase the interest burden and delay recovery in standalone credit quality.

The third downside is deterioration in government support expectations. If government ownership declines, the tariff system becomes less transparent, losses remain unresolved for an extended period, capital policy is delayed, public utility tariff policy becomes excessively politicized, or sovereign ratings deteriorate, the market would reassess support-adjusted credit quality. Under the KEPCO Act, there is institutional room for government-guaranteed bonds, but if individual bonds do not have explicit guarantees, weaker support expectations alone could affect spreads.

The most important item for the next update is FY2026 Q1 results. As of May 12, 2026, FY2026 Q1 results had not yet been confirmed on the official IR Resources page, so it is necessary to confirm whether the 2025 improvement is being sustained in 2026. The focus will be whether fuel and purchased power costs remain stable, whether sales tariffs are maintained, whether operating cash flow has room to exceed investment spending, and whether current financial liabilities decline.

11. Credit View and Monitoring Focus

Based on the high international ratings shown on the official credit rating page, KEPCO’s current credit quality is likely to be treated, on a government-support-inclusive basis, as a quasi-sovereign close to the Korean sovereign. However, looking only at standalone credit quality, it remains strongly constrained by the tariff system and large debt. The credit trajectory is improving thanks to 2025 earnings recovery, operating cash flow improvement, and capital recovery, but the pace of improvement depends on tariffs, fuel costs, and investment burden, and rapid standalone normalization has not yet been confirmed. The probability of a rapid deterioration in credit level or direction is not high under ordinary conditions, but if fuel costs, purchased power costs, KRW depreciation, and tariff freezes overlap, standalone financials and spreads could deteriorate again over a short period.

This credit view is supported by KEPCO’s indispensability in South Korean power supply, majority government/KDB ownership, guarantee capacity under the KEPCO Act, high ratings, market access, and nationwide electricity sales revenue. Compared with an ordinary corporate, the government has a stronger incentive to maintain KEPCO’s credit. Electricity supply is essential to society and industry, and if the company’s funding becomes constrained, the impact would spread across the tariff system, electricity market, generation investment, and household and industrial power costs. Therefore, government support expectations need to be central in assessing default risk.

At the same time, the standalone financial constraints are clear. In 2025, profit and operating cash flow improved materially, but total liabilities were around KRW 205.7 tn, current financial liabilities were KRW 45.9 tn, and the working capital deficit was KRW 36.4 tn. Cash balances alone do not sufficiently cover short-term financial liabilities, and continued market access is a premise. Because lower fuel costs and tariff recovery contributed to earnings improvement, a renewed rise in fuel costs or tariff freezes would again pressure profits.

For bond investors, the most important point is not to treat KEPCO simplistically as a government-guaranteed bond. Expectations of government support are very strong, and there is institutional room under the KEPCO Act for government-guaranteed bonds. However, ordinary obligations do not automatically become direct obligations of the Korean government. Therefore, while recognizing strong support at the issuer-credit level, investors in individual bonds need to confirm guarantee clauses, maturity, currency, collateral, cross-default, and change-of-control provisions.

When used for investment decisions, KEPCO can be positioned as a defensively strong Korean quasi-sovereign, but with greater business and tariff risk than policy banks. It should not be treated the same as direct policy finance issuers such as KDB/KEXIM, and relative to KOGAS, KNOC, KHNP, and private regulated utilities, distinctions should be made based on tariff pass-through, commodity prices, policy burden, legal guarantees, and debt size. Because live spreads are not available, this report does not make a relative-value conclusion on whether the bonds are cheap or expensive. In deciding whether to hold, investors need to separately confirm through market data whether the additional risks from the tariff system and debt are adequately compensated relative to the stability of a high-rated quasi-sovereign.

Going forward, monitoring should prioritize FY2026 Q1 and subsequent results, tariff notifications, fuel cost adjustment unit prices, SMP, LNG and coal prices, KRW, operating cash flow, investment spending, current financial liabilities, interest payments, rating agency comments, and the South Korean sovereign rating. In particular, it is important to determine whether the 2025 earnings recovery was a temporary improvement dependent on a single year of fuel-cost and tariff conditions, or a sustainable improvement that leads to debt reduction.

12. Short Summary & Conclusion

KEPCO is South Korea’s core government-related electric utility, encompassing transmission and distribution, electricity sales, and major generation subsidiaries. Majority ownership by the government and KDB, the indispensability of power supply, and high ratings strongly support credit quality, while standalone financials are constrained by tariff-system lags, fuel and purchased power costs, KRW, large debt, and capital expenditure burden. The 2025 earnings recovery has improved the credit direction, but full standalone financial normalization will still take time, so tariff revisions, fuel cost adjustment, current financial liabilities, individual bond guarantees, and the Korean sovereign rating need continued monitoring.

13. Sources

• KEPCO, Form 20-F for year ended 2025-12-31, filed with SEC on 2026-04-29: https://www.sec.gov/Archives/edgar/data/887225/000119312526190113/d86100d20f.htm
• KEPCO, Form 6-K audit report for FY2025, filed 2026-03-13: https://www.sec.gov/Archives/edgar/data/887225/000119312526105961/d793123d6k.htm
• KEPCO, Form 6-K, FY2025 and Q4 2025 preliminary K-IFRS results, filed 2026-02-26: https://www.sec.gov/Archives/edgar/data/887225/000119312526073342/d119889d6k.htm
• KEPCO, Form 6-K, dividend resolution for FY2025, filed 2026-02-26: https://www.sec.gov/Archives/edgar/data/887225/000119312526073345/d119108d6k.htm
• KEPCO, Form 6-K, KENTECH contribution, filed 2026-03-30: https://www.sec.gov/Archives/edgar/data/887225/000119312526130298/d21782d6k.htm
• KEPCO, Form 6-K, extraordinary general meeting result, filed 2026-04-27: https://www.sec.gov/Archives/edgar/data/887225/000119312526178954/d848044d6k.htm
• KEPCO, Exhibit 15.1, Korea Electric Power Corporation Act, SEC filing exhibit: https://www.sec.gov/Archives/edgar/data/887225/000119312523124899/d427740dex151.htm
• KEPCO official IR resources page: https://www.kepco.co.kr/eng/investor-relations/ir-information/ir-resources/boardList.do
• KEPCO official credit ratings page: https://www.kepco.co.kr/home/about/invest/irinfo/creditrating/conts.do
• KEPCO official company overview: https://www.kepco.co.kr/eng/about-us/company/overview.do
• KEPCO official transmission and distribution business page: https://www.kepco.co.kr/eng/business/domestic/transmission-and-distribution-business.do
• KEPCO official sales and demand management / tariff page: https://www.kepco.co.kr/eng/business/domestic/sales-demand-management.do
• KEPCO official fuel cost adjustment system page: https://home.kepco.co.kr/kepco/indi/foreign/en/html/F/B/ENFBHP005.html
• KEPCO official subsidiaries page: https://www.kepco.co.kr/eng/about-us/organization/subsidiaries/power-groups/conts.do
• Korea JoongAng Daily, KEPCO to keep electricity rates frozen for first quarter of 2026, 2025-12-22: https://koreajoongangdaily.joins.com/news/2025-12-22/business/industry/Kepco-to-keep-electricity-rates-frozen-for-first-quarter-of-2026/2483330
• Yonhap News Agency, KEPCO FY2025 earnings article, 2026-02-26: https://en.yna.co.kr/view/AEN20260226009551320
• KOGAS official credit rating page: https://www.kogas.or.kr/site/koGas/1050103020000
• S&P Global Ratings, Korea Gas Corp. proposed Australian dollar-denominated senior unsecured notes rated AA, 2026-05-06: https://www.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3557168
• KNOC official credit rating page: https://www.knoc.co.kr/ENG/sub04/sub04_3_2.jsp
• KNOC official website, operations overview: https://www.knoc.co.kr/ENG/main.jsp

14. Unverified / Pending

• FY2026 Q1 earnings results and related conference call materials were not yet confirmed on the official KEPCO IR Resources page as of 2026-05-12.
• Detailed audited debt maturity table, foreign-currency debt mix, hedge position, committed credit lines and current bank facilities should be extracted from the full FY2025 Form 20-F / audit report in a future update.
• Specific bond documentation was not reviewed. Before investing in a specific issue, confirm issuer, guarantee, government guarantee language, parent guarantee, maturity, currency, ranking, negative pledge, cross default, change of control, listing venue and governing law.
• Latest rating agency full releases after the KEPCO official credit rating page update date managed in source_registry as 2025-09-04 should be checked in the next rating-focused update.
• Exact same-date comparison with the Republic of Korea sovereign ratings should be confirmed before using a stricter sovereign-equivalence statement.
• Live bond prices, spreads, OAS, CDS and same-maturity peer spread comparisons were not available in this workspace and are not used to make a relative-value conclusion.