Issuer Summary: Korea Hydro & Nuclear Power

Date prepared: 2026-05-18

1. Business Snapshot and Recent Developments

Korea Hydro & Nuclear Power Co., Ltd. (“KHNP”) is a wholly owned KEPCO generation subsidiary responsible for Korea’s nuclear, hydro and pumped-storage power generation, and is a government-related issuer that operates the most important low-fuel-cost generation source within Korea’s power system. It is neither a pure private-sector power generator, nor KEPCO itself, nor a direct debt issuer of the Korean government. For bond investors, the key is to assess KHNP’s policy importance as Korea’s sole nuclear power generation company, its indispensability within the KEPCO group, its high external ratings and market access, while separately analysing nuclear safety regulation, plant outages, decommissioning, spent fuel and radioactive-waste-related obligations, overseas nuclear projects, and whether individual bonds have guarantees.

In one sentence, KHNP can be defined as “a quasi-sovereign generation subsidiary under KEPCO that effectively has sole responsibility for Korea’s nuclear baseload power.” According to the July 2025 GMTN Offering Circular, the company was spun off from KEPCO in April 2001 as part of the restructuring of Korea’s electric power industry and became Korea’s sole nuclear power generation company. Electricity generated by the company is sold to KEPCO through KPX pursuant to Article 31 of Korea’s Electric Utility Act. As of end-March 2025, KHNP owned 26 nuclear units with 26,050MW of capacity, and KHNP’s official Overview states that its generation share at end-2025 was 32.04% of Korea’s total.

Its credit quality cannot be read from simple financial ratios alone. Because KHNP is a 100% subsidiary of KEPCO and nuclear power is deeply embedded in Korea’s electricity supply and energy security, support expectations are stronger than for an ordinary power generation company. KEPCO’s FY2025 Form 20-F, filed with the SEC on 2026-04-29, shows the Korean government holding 18.20% and Korea Development Bank holding 32.90%, with the government/KDB block holding 51.10%, making the government-related nature of the parent clear as well. However, parent ownership, policy importance, rating-agency support uplift, and legal guarantees on individual bonds are not the same thing. When evaluating ordinary debt, investors need to confirm in the relevant documentation that the issuer is KHNP and whether there is an explicit guarantee from KEPCO or the Korean government.

The most important recent development is the sharp improvement in earnings and cash flow from 2024 through 9M 2025. Selected financials in the GMTN Offering Circular show FY2024 revenue of KRW 13,602bn, operating profit of KRW 1,602bn and net profit of KRW 573bn, improving from FY2023 revenue of KRW 10,978bn, operating profit of KRW 793bn and net profit of KRW 122bn. KHNP’s official Financial Statements page shows 9M 2025 revenue of KRW 11,955.9bn, operating profit of KRW 3,192.5bn and net profit of KRW 2,022.8bn. The 9M 2025 figures are not full-year audited results, but they at least confirm that generation volume, selling prices and nuclear utilisation strongly lifted the company’s earnings from 2024 into 2025.

That said, it is premature to treat the improvement as a permanent credit strengthening. Nuclear power generation produces strong operating cash flow when utilisation is high, but during outages or regulatory responses, sales volume falls while fixed costs and investment burdens remain. Based on official web data as of end-September 2025, total assets were KRW 76,935.1bn, total liabilities were KRW 49,801.1bn and total equity was KRW 27,134.0bn, while non-current provisions alone amounted to KRW 27,738.6bn. The analysis needs to cover not only ordinary financial debt but also decommissioning, radioactive waste, spent fuel and overseas-project-related obligations.

Overseas business should also be treated not simply as a growth opportunity but as a separate credit risk. KHNP is involved in overseas nuclear-related projects in the UAE, Czech Republic, Romania, Egypt and elsewhere, and its official 2025 History confirms matters such as the EPC contract for Dukovany Units 5 and 6 in the Czech Republic and the start of decommissioning for Kori Unit 1. These developments demonstrate technical capability and policy role, but they also involve risks spanning long-term construction, contract profitability, disputes, guarantees, provisions, foreign exchange and host-country politics.

2. Industry Position and Franchise Strength

KHNP’s business foundation is supported less by ordinary competitive advantage than by its indispensability within Korea’s electricity supply system. Korea has large electricity demand, with a high share of industrial demand. Within the generation mix, nuclear power is an important baseload source that limits fuel-cost volatility and supports stable electricity supply. KHNP is responsible for almost all of this nuclear generation and sells the electricity it generates to KEPCO through KPX. Therefore, the company’s franchise lies not in customer brand or a retail network, but in its generation assets, nuclear operating capability, response to safety regulation, role within the KEPCO group and the government’s nuclear policy.

According to the GMTN Offering Circular, as of 2025-03-31 KHNP owned and operated 26 nuclear units with total capacity of 26,050MW, 53 hydro and pumped-storage units with total capacity of 5,307MW, 67 solar units with total capacity of 84.7MW, and one wind unit with 0.75MW. The company’s share of Korea’s total generation capacity was stated at 20.4%. Even though its capacity share is in the 20% range, its generation share is larger because nuclear capacity has high utilisation. The official Overview’s end-2025 generation share of 32.04% shows that the company’s role in actual electricity supply is larger than its capacity share alone would suggest.

The company’s presence is also clear in electricity sales volume. The Offering Circular states that KHNP sold 185,422GWh to KEPCO in 2024 and 50,874GWh in the first quarter of 2025. It also states that nuclear power represented 32.6% of Korea’s electricity sales in 2024 and 35.6% in the first quarter of 2025. In KHNP’s own generation mix, nuclear accounted for 96.6% in 2024 and 97.1% in the first quarter of 2025. This means that, for credit-risk purposes, it is more accurate to view the company as “a nuclear power generation company that also owns hydro, pumped-storage and small-scale renewables” rather than as “a diversified generation company including hydro and renewables.”

This franchise is a credit strength. Nuclear power has a relatively low fuel-cost component, and if the fleet operates at high utilisation, earnings are easier to protect than those of thermal generators during periods of rising fuel prices. Because nuclear power is indispensable to Korea’s overall stable electricity supply, the government and KEPCO also have strong incentives to support KHNP’s business continuity and funding.

However, a strong franchise is not the same as unconstrained pricing power. KHNP sells the electricity it generates to KEPCO through KPX. The Offering Circular explains that electricity transactions in Korea are generally conducted through KPX and that, under the cost-based pool system, prices mainly consist of marginal prices and capacity prices. The marginal price is related to the System Marginal Price (SMP), and price adjustments by fuel type are made through adjustment coefficients. In other words, the company’s earnings are not simply fully exposed to market prices; they are affected by regulated prices, output, capacity and policy decisions.

This institutional structure brings both stability and constraints. Sales to KEPCO reduce commercial demand-acquisition risk, but selling prices are determined under the system, and if the treatment of adjustment coefficients or capacity prices changes, the extent to which KHNP retains the benefit of nuclear power’s low fuel cost may also change.

3. Segment Assessment

In assessing KHNP’s segments, it is more important to separate the credit characteristics of each generation source than to break down accounting segment profit in detail. Nuclear power is the centre of earnings and policy importance, while hydro and pumped storage provide complementary functions for grid stability and peak response. Renewable energy has significance as a policy response, but its current scale is small relative to nuclear. Overseas nuclear business can be a strength in terms of technology exports and policy presence, but it can also become a credit constraint through contract risk, profitability, guarantees, litigation and disputes, and provisions.

Nuclear power generation is the business that determines almost all of KHNP’s earnings. Nuclear accounted for 96.6% of KHNP’s generation in 2024 and 97.1% in the first quarter of 2025, and credit quality depends heavily on utilisation, safety, regulatory approvals, unplanned outages, life extensions, new construction and decommissioning, fuel procurement and waste management. The company is relatively resilient to fuel-cost volatility, but regulatory events or prolonged outages directly affect sales volume and cash flow.

Hydro and pumped storage are smaller than nuclear in earnings scale, but have system value in supply-demand balancing, peak response and balancing capability as renewable energy expands. However, hydro and pumped storage alone do not support debt or long-term provisions; the main driver of credit quality is nuclear power.

Renewable energy is complementary. End-2025 solar capacity was 88.68MW, small compared with nuclear capacity of 26,050MW and pumped-storage capacity of 4,700MW. It has significance for RPS compliance and decarbonisation policy, but there is no need at this stage to build the credit view around renewable growth.

Overseas business is an easily overlooked constraint. Nuclear exports have strategic significance, but as long-term projects, they are affected by construction periods, costs, local regulation, host governments, contractor scope, foreign exchange, guarantees and disputes. If successful, they provide earnings opportunities, but if unsuccessful they can turn into provisions, cash outflows and reputational risk.

4. Financial Profile and Analysis

KHNP’s financial profile combines a sharp improvement in profitability from 2024 through 9M 2025 with continuing capital intensity and large long-term provisions. As a nuclear power generation company, operating cash flow is strong when fleet utilisation is high and institutional selling prices are favourable. However, because capex, decommissioning and waste-related obligations, long-term projects and debt repayments continue, even in years of higher profit, free cash flow, net debt and the quality of provisions need to be checked at the same time.

Looking at audited data through FY2024, revenue increased from KRW 10,608bn in FY2022 to KRW 10,978bn in FY2023 and KRW 13,602bn in FY2024. Operating profit improved from KRW 645bn in FY2022 and KRW 793bn in FY2023 to KRW 1,602bn in FY2024, while net profit recovered from KRW -62bn in FY2022 to KRW 122bn in FY2023 and KRW 573bn in FY2024. The FY2022 loss shows that the company’s nuclear power business is not always stably profitable, while the FY2024 improvement shows that earnings power can recover strongly when utilisation, selling prices and the regulatory environment align.

The improvement became even larger in 2025. Q1 2025 revenue was KRW 4,308bn, operating profit was KRW 1,284bn and profit for the period was KRW 823bn. Official web data for 9M 2025 show revenue of KRW 11,955.9bn, operating profit of KRW 3,192.5bn and profit for the period of KRW 2,022.8bn. The strength seen in Q1 continued through the nine-month period, and 2025 is clearly an improvement phase for the company’s standalone financials. However, 9M 2025 data are not full-year audited results, and year-end impairments, provisions, overseas projects, taxes, finance costs and the final cash-flow position need to be confirmed separately.

Note: FY2022-FY2024 and Q1 2025 use selected financials from the July 2025 GMTN Offering Circular. 9M 2025 uses the web summary on KHNP’s official Financial Statements page for the period ended 2025-09-30, confirmed on 2026-05-18, converted from units of KRW 100mn to KRW bn. 9M 2025 is not full-year audited financial information. Approximate FCF is a simple sum of operating cash flow and investing cash flow, and is not company-disclosed FCF.

The most important point in this table is that strong operating cash flow and heavy investing cash flow coexist in 2025. Operating CF for 9M 2025 was large at KRW 4,718.1bn, but investing CF was an outflow of KRW 4,587.0bn, leaving approximate FCF of only KRW 131.1bn. The credit assessment should focus not only on profit in a year of good utilisation, but also on how much cash remains after capex to allocate to debt, provisions and maturities.

On the balance sheet, it is not possible to say that the company is excessively weak when looking only at financial debt. As of end-September 2025, current financial liabilities were KRW 1,258.9bn, non-current financial liabilities were KRW 13,768.5bn, and cash and cash equivalents were KRW 361.7bn. On the other hand, total liabilities were KRW 49.8tn, and the gap versus financial debt is mainly explained by provisions and other liabilities. For a nuclear power company, leverage should not be judged only from bank borrowings and bonds.

Provisions are a central issue. Official web data as of end-September 2025 show current provisions of KRW 2,034.8bn and non-current provisions of KRW 27,738.6bn. Notes in the Offering Circular cover contingencies, provisions and contractual matters related to radioactive-waste management, spent fuel, decommissioning, RECs and overseas projects. However, this report has not extracted the detailed breakdown, sensitivities or payment timing of provisions as of end-September 2025, and does not judge provision adequacy.

In assessing the 2025 earnings improvement, the sustainability of sales volume, prices and utilisation is key. Selling prices are affected by the KPX system, SMP, adjustment coefficients, capacity prices and policy decisions. Nuclear utilisation is also affected by periodic inspections, regulation, safety responses, life extensions for ageing reactors and outage periods. The 9M 2025 profit should not be fixed as a normal run rate; it needs to be checked against FY2025 full-year audited results and quarterly data from FY2026 onward.

Overall, KHNP’s standalone credit profile among Korean government-related issuers is a type with “a strong earnings base but large nuclear-specific obligations and heavy dependence on the institutional framework.” The support-inclusive ratings are high, but standalone financial analysis needs to consider profit level, post-investment FCF, financial debt, provisions, overseas projects and individual bond guarantees as a package.

5. Structural Considerations for Bondholders

The most important structural point for bondholders is to assess KHNP as a “government-related issuer” while not mechanically equating it with a “government-guaranteed bond” or a “KEPCO-guaranteed bond.” KHNP is a 100%-owned subsidiary of KEPCO, and KEPCO is a government-related electric utility at the centre of Korea’s electricity system. Policy importance and parent linkage are very strong. However, notes under the 2025 GMTN Offering Circular are described as direct, unconditional, unsubordinated and unsecured obligations of KHNP itself, ranking pari passu with other unsecured obligations. This indicates that the key credit source for ordinary KHNP notes is “KHNP issuer credit and support expectations,” not the assumption that “all series have explicit guarantees.”

Support can be divided into four layers. The first layer is standalone credit quality, comprising nuclear assets, sales to KEPCO through KPX, operating CF, debt, provisions and liquidity. The second layer is parent support from KEPCO’s 100% ownership, the company’s indispensability within the group, and KEPCO’s funding and policy position. The third layer is government support expectations based on government/KDB ownership of KEPCO, nuclear policy and the electricity-market framework. S&P’s public article dated 2025-10-28 also discusses KEPCO and five generation subsidiaries in the context of government support. The fourth layer is the legal guarantee and terms of individual bonds, which need to be confirmed in the final terms and other relevant documents.

This layering is directly relevant to investment decisions. KHNP’s high ratings do not mean all notes should be treated as having the same recovery structure as Korean sovereign bonds. Conversely, the absence of an explicit guarantee does not mean KHNP should be treated in the same way as an ordinary independent power producer. The form of support can vary depending on the situation, including tariffs and market systems, capital or liquidity support from KEPCO, policy finance, guaranteed issuance and capital injections.

The GMTN programme terms contain basic protections for bondholders. The Offering Circular explains that the notes constitute direct, unconditional, unsubordinated and unsecured obligations of the issuer and rank pari passu with other unsecured obligations, except for obligations that are preferred by law. It also includes certain covenants relating to security interests, sale-and-leaseback transactions, mergers and asset sales, and the Events of Default include non-payment of interest, non-payment of principal, cross-acceleration of certain external indebtedness, insolvency and cessation of business. At the issuer level, these resemble standard investment-grade corporate bond terms, but they differ from project-finance bonds with security, account controls and DSCR protections.

From a parent-subsidiary perspective, KEPCO is the centre of transmission, distribution, sales and group funding, while KHNP is a generation subsidiary. KHNP bonds are a credit based on nuclear assets, generation cash flow and support expectations, and are not completely identical to KEPCO parent bonds.

The legal substance of government support remains an unconfirmed item. Whether an individual KHNP bond has an explicit guarantee from the Korean government or KEPCO may vary by series. This report has only confirmed the general status description in the 2025 GMTN programme and has not reviewed all outstanding bonds for guarantees, cross-default, change of control, security, tax gross-up, listing venue or governing law. For an investment decision on a specific bond, the final terms for each relevant KOHNPW issue need to be checked.

6. Capital Structure, Liquidity and Funding

KHNP’s capital structure is one in which market funding is available on the back of strong operating cash flow and high ratings, while the cash balance is not large and the investment and long-term obligation burden is heavy. Cash and cash equivalents at end-September 2025 were only KRW 361.7bn, not enough on their own to cover current financial liabilities of KRW 1,258.9bn. Therefore, the liquidity assessment is premised not on a thick cash balance, but on high ratings, market access, KEPCO/government-related status and the maintenance of operating CF from the nuclear business. This report has not obtained a maturity schedule, committed lines or bank facilities.

The official Debt Information page shows long-term borrowings rising from KRW 9,823,266mn in 2020 to KRW 13,923,708mn in 2024, then declining slightly to KRW 13,642,257mn in 2025. Short-term borrowings were KRW 1,205,756mn in 2025. Because the exact reference date for 2025 is not separately specified on that page, this report treats the figure as the official Debt Information 2025 column.

Note: KHNP’s official Debt Information page was confirmed on 2026-05-18. Units are KRW mn. The reference date for the 2025 column was not separately confirmed on the page.

Operating CF of KRW 4,718.1bn in 9M 2025 is large relative to current financial liabilities of KRW 1,258.9bn and the short-term borrowing balance. However, investing CF was also an outflow of KRW 4,587.0bn, meaning that most operating CF was absorbed by investment. Liquidity analysis needs to confirm post-capex surplus, debt redemption, long-term provision outflows, dividends and intragroup transactions.

Market access is a strength. KHNP has a GMTN programme and issued foreign-currency bonds through a July 2025 Pricing Supplement. Given its high ratings, KEPCO parent linkage and importance within Korea’s electricity system, normal market funding capacity appears strong. However, this report has not checked live issuance spreads or secondary-market liquidity.

The key point in the capital structure is the dual structure of financial debt and provisions. Financial debt and cash are important for bond redemption, but long-term credit quality also needs to include non-current provisions and nuclear-related obligations. Debt/equity alone is likely to understate nuclear-specific long-term obligations.

Foreign-currency, interest-rate and hedge information has not been confirmed. Because KHNP issues foreign-currency bonds and is involved in overseas projects, FX and interest-rate risks are important. For investment in individual bonds, investors should confirm the foreign-currency debt mix, fixed/floating mix, hedges and committed lines.

7. Rating Agency View

KHNP’s external ratings are high. KHNP’s official Credit Ratings page, confirmed on 2026-05-18, showed Moody’s at Aa2/stable, S&P at AA/stable and Fitch at AA-/stable. This indicates that the company is not being assessed as an ordinary independent power producer, but is strongly linked to the KEPCO group, Korea’s electricity system, government support expectations and Korea’s sovereign credit quality. This support-inclusive rating should not be ignored when assessing the issuer’s ability to pay.

However, the high ratings should not be treated as evidence of standalone financial strength itself. KHNP’s standalone financials improved sharply in 2025, but the company has nuclear provisions, capex, a single buyer, dependence on the institutional framework and overseas-project risk. If KHNP were viewed as a fully private independent power producer, it would be difficult to place it at the same rating level. The high ratings should be read as reflecting the relationship with KEPCO and the government, the policy importance of electricity supply and support expectations.

S&P’s public article dated 2025-10-28 discusses the ratings of KEPCO and five generation subsidiaries in the context of support expectations from the Korean government. For KHNP, the indispensability of Korean nuclear generation, KEPCO’s 100% ownership, KEPCO’s own government/KDB control and high-rating-supported market access support the support-inclusive credit profile. On the other hand, whether an individual bond has an explicit guarantee, what support tools the government would use, and how closely the rating would move if the sovereign rating changed require separate confirmation.

When monitoring ratings, investors need to look not only at KHNP itself but also at the Korean sovereign, KEPCO, KOGAS, KNOC, KDB and KEXIM. A downgrade of the Korean sovereign could affect the ceiling for support-inclusive ratings and the market’s quasi-sovereign assessment. Deterioration in KEPCO’s tariff system, debt or earnings could affect parent support expectations and relative positioning within the group. Nuclear regulation, safety events, overseas-project losses and a sharp increase in provisions could be reflected in ratings or outlooks as KHNP-specific constraints.

8. Credit Positioning

Within Korean quasi-sovereign bonds, KHNP is naturally positioned as having less direct support than policy banks but stronger support expectations than ordinary private utilities or power generation companies. The Korean sovereign and KDB/KEXIM have a higher degree of direct support, while KEPCO, as the parent, bears transmission, distribution, sales, funding and tariff-system responsibilities broadly. KHNP supports the KEPCO group as a low-fuel-cost nuclear power source, while carrying specific risks in nuclear safety, provisions and overseas projects. KOGAS is centred on LNG procurement and gas tariffs, and KNOC on oil prices and upstream assets; KHNP’s main risks are nuclear utilisation, regulation and long-term obligations rather than commodity prices themselves.

For investment purposes, KHNP is useful as a defensively strong Korean quasi-sovereign issuer, but this report has not checked live bond prices, yields, OAS, CDS, or comparisons with same-maturity Korean sovereign, KEPCO, KOGAS, KDB and KEXIM bonds. Qualitatively, it requires additional spread versus policy banks, while support expectations are stronger than for ordinary private utilities.

9. Key Credit Strengths and Constraints

KHNP’s credit strengths are its high difficulty of substitution as Korea’s sole nuclear power generation company, 100% ownership by KEPCO, improved earnings and operating CF through 9M 2025, high ratings and access to domestic and international markets. The official generation share of 32.04%, 9M 2025 operating profit of KRW 3,192.5bn and operating CF of KRW 4,718.1bn support support-inclusive credit quality and short-term repayment capacity.

Constraints are nuclear-specific risk, dependence on the institutional framework, thin post-investment FCF, overseas projects and unconfirmed guarantees on individual bonds. Safety events, regulatory shutdowns, failure to obtain life extensions, decommissioning and spent fuel, KPX/SMP/adjustment coefficients and losses on overseas projects could affect earnings, provisions and market valuation. The fact that non-current provisions are larger than financial debt shows that this risk is also a central accounting issue.

10. Downside Scenarios and Monitoring Triggers

The most realistic downside scenario is a combination of nuclear-unit outages or lower utilisation with unfavourable changes in the electricity sales system. If unplanned outages, safety-regulation responses, delays in life extensions or prolonged repairs occur, sales volume and operating CF decline. If SMP, adjustment coefficients, capacity prices or the long-term contract system for nuclear power move unfavourably, profitability can fall even at the same generation volume.

The next downside scenarios are deterioration in estimates for decommissioning, waste and spent fuel, overseas-project losses, and a market reassessment of support capacity from parent KEPCO or the Korean sovereign. These may not directly create short-term default risk, but they could affect capital, FCF, rating assessment and spreads.

The top priority for the next update is FY2025 full-year audited financials and quarterly data from FY2026 onward. Because earnings were strong through 9M 2025, it is necessary to confirm how much provision expense, investment spending, taxes, finance costs and debt repayment were reflected at year-end. In addition, NSSC operating-permit and outage-related information, discussions on a vesting contract for nuclear power, the KPX settlement system, overseas-project contracts and disputes, and individual bond terms should be monitored continuously.

11. Credit View and Monitoring Focus

KHNP’s current credit-quality level is quite strong as a high-grade Korean quasi-sovereign on a support-inclusive basis, but on a standalone basis, its strong operating CF and institutional sales base should be separated from its support-inclusive AA-category assessment because of thin cash, large long-term provisions and limited post-investment FCF. In terms of direction, the improvement in profit and operating CF through 9M 2025 points to short-term improvement, but the pace of improvement depends on FY2025 full-year audited financials, nuclear utilisation, selling prices and post-investment FCF, and rapid debt reduction has not yet been confirmed. The likelihood of a rapid deterioration in level or direction is not high under normal conditions, but if a large-scale outage, regulatory event, overseas-project loss and lower support expectations occur together, standalone financials and spreads could deteriorate in a short period.

The main basis for this view is KHNP’s indispensability in Korea’s electricity supply. The official end-2025 generation share of 32.04% and the scale of 26 nuclear units with 26,050MW at end-March 2025 show that the company is not merely one power generator, but an entity embedded in Korea’s power-system stability. The structure of selling generated electricity to KEPCO through KPX constrains free pricing power, but it also reduces commercial demand risk and creates credit support through the KEPCO group and government support expectations.

Financially, the improvement through 9M 2025 is clearly positive. Operating profit of KRW 3,192.5bn, profit for the period of KRW 2,022.8bn and operating CF of KRW 4,718.1bn strengthen short-term repayment and refinancing capacity. However, investing CF over the same period was an outflow of KRW 4,587.0bn, and approximate FCF was not large. In addition, non-current provisions of KRW 27,738.6bn indicate long-term obligations not visible in ordinary financial-debt metrics. Therefore, strong earnings do not mean standalone financials have fully normalised.

The practical conclusion for bondholders is to treat KHNP as “a defensively strong Korean quasi-sovereign on a support-inclusive basis,” while not treating it as sovereign-equivalent without checking parent guarantees, government guarantees and individual terms. KOHNPW bonds have stronger support than ordinary private-sector generation bonds, supported by high ratings, KEPCO’s 100% ownership and the indispensability of nuclear power. At the same time, investment decisions need to confirm spreads, liquidity, issue size, guarantees, governing law, maturity and currency relative to same-maturity Korean sovereign, KDB, KEXIM, KEPCO, KOGAS and KNOC bonds. This report has not checked live market data and therefore does not conclude whether the bonds are cheap or rich.

For future monitoring, priorities should be: first, FY2025 full-year audited financials and FY2026 quarters; second, nuclear capacity factor and NSSC-related developments; third, KPX/SMP/adjustment coefficients and long-term contracts for nuclear power; fourth, non-current provisions and decommissioning/spent fuel; fifth, overseas nuclear projects; and finally, KEPCO, the Korean sovereign and rating-agency actions. The base case currently recognises high support-inclusive credit quality, but the company’s essence is not “a stable government-guaranteed bond”; it is “a support-inclusive generation credit that simultaneously owns a large policy asset in nuclear power and large long-term obligations.”

12. Short Summary & Conclusion

Korea Hydro & Nuclear Power is KEPCO’s 100%-owned and Korea’s sole nuclear power generation company, and is an important quasi-sovereign issuer responsible for about 30% of the country’s electricity supply. Support-inclusive credit quality is strong, but individual bonds are not direct government debt. Nuclear safety, decommissioning and spent-fuel provisions, the KPX/KEPCO sales framework, and overseas nuclear projects are the main monitoring issues.

13. Sources

• Korea Hydro & Nuclear Power, official Overview page: https://www.khnp.co.kr/eng/contents.do?key=414
• Korea Hydro & Nuclear Power, official Financial Statements page: https://www.khnp.co.kr/eng/contents.do?key=464
• Korea Hydro & Nuclear Power, official Debt Information page: https://www.khnp.co.kr/eng/contents.do?key=466
• Korea Hydro & Nuclear Power, official Credit Ratings page: https://www.khnp.co.kr/eng/contents.do?key=469
• Korea Hydro & Nuclear Power, official Shareholder Information page: https://www.khnp.co.kr/eng/contents.do?key=459
• Korea Hydro & Nuclear Power, official Past Data page: https://www.khnp.co.kr/eng/contents.do?key=467
• Korea Hydro & Nuclear Power, official 2025 History page: https://www.khnp.co.kr/eng/contents.do?key=3808
• Korea Hydro & Nuclear Power, US$5,000,000,000 Global Medium Term Note Program Offering Circular and July 2025 pricing supplement, SGX: https://links.sgx.com/FileOpen/KHNP%20Final%20Offering%20Circular.ashx?App=Prospectus&FileID=67009
• 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
• S&P Global Ratings, Kepco and five power generating companies rating update, 2025-10-28: https://www.spglobal.com/ratings/en/regulatory/article/-/view/sourceId/101652085
• S&P Global Ratings, Republic of Korea sovereign rating context, 2026-04-29: https://www.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3553472
• Nuclear Safety and Security Commission official English website: https://www.nssc.go.kr/en/index.do

14. Unverified / Pending

• FY2025 audited full-year KHNP consolidated financial statements were not extracted. The latest official web-summary financial data used in this report is 2025-09-30.
• FY2026 Q1 or later official KHNP financial statements, cash flow, debt, provisions and notes were not checked.
• Specific KOHNPW bond final terms were not reviewed for every issue. Before investing in a specific bond, confirm issuer, guarantee, government guarantee language, KEPCO guarantee, maturity, currency, ranking, negative pledge / limitations on liens, sale and leaseback, cross acceleration, change of control, tax gross-up, listing venue and governing law.
• Live bond prices, yields, OAS, Z-spreads, CDS and same-maturity comparisons with Korea sovereign, KDB, KEXIM, KEPCO, KOGAS, KNOC and other KEPCO generation subsidiaries were not available and are not used for a relative-value conclusion.
• Detailed reactor-by-reactor operating age, license expiry, continued-operation status, forced outage history and capacity factor were not fully extracted.
• Nuclear liability, insurance coverage, spent-fuel storage policy, decommissioning cash-flow schedule, radioactive waste funding arrangements and provision sensitivity were not fully reviewed.
• Uranium / nuclear fuel procurement contracts, supplier concentration, inventory, sanctions exposure and long-term fuel-cost sensitivity were not fully reviewed.
• Capex plan, committed credit lines, bank facilities, foreign-currency debt mix, fixed / floating interest-rate mix and hedge position were not fully extracted.
• Czech, UAE, Romania, Egypt and other overseas nuclear project economics, guarantees, dispute status, cash-flow timing and provision adequacy require further primary-source confirmation.