Rating Action: Moody’s affirms KHFC’s Aa2/P-1 issuer ratings; outlook stableGlobal Credit Research – 19 Jan 2022Hong Kong, January 19, 2022 — Moody’s Investors Service has affirmed the Aa2 foreign currency long-term issuer rating and P-1 short-term issuer rating of Korea Housing Finance Corporation (KHFC).The outlook on KHFC remains stable.RATINGS RATIONALEKHFC’s Aa2 ratings reflect a very high level of support from the Government of Korea (Aa2 stable), given the company’s important policy function of supporting Korea’s housing sector. The ratings also consider a very high level of dependence between KHFC and the Korean government, given their very close operational and financial linkages. Moody’s believes that the probability of support from the Government of Korea is near certain, which leads to the equalization of KHFC’s issuer rating with the government’s rating.KHFC is an important policy arm of the government that promotes national economic development by facilitating the supply of housing finance on a stable and long-term basis.The ratings are further underpinned by Article 5 and Article 51 of the KHFC Act, the charter under which KHFC operates. Article 5 stipulates that the government and the Bank of Korea must fully contribute to the corporation’s capital. Article 51 holds the government responsible for KHFC’s solvency, meaning that if the latter’s reserves are insufficient to absorb losses, the former is legally obligated to replenish the deficit. Also, KHFC is wholly owned and controlled by the government, through the ownership by the Ministry of Economy and Finance (63.5%), the National Housing Urban Fund (5.2%) and the Bank of Korea (31.3%) at the end of June 2021.The government has a close relationship with KHFC through its supervision of the company’s operations, as well as its management and governance. The company’s steering committee consists of a president and five members appointed by the Financial Services Commission and the Ministry of Land, Infrastructure and Transport. The committee decides on the basic policies for KHFC’s operations, while the government appoints the management team.The corporation has a policy mandate to improve mid-to-low income earners’ access to housing finance. Its business areas cover: (1) supplying long-term fixed-rate mortgages; (2) securitizing long-term housing mortgage loans; and (3) managing two government guarantee funds — the Housing Finance Credit Guarantee Fund for low-income households, and the JTYK Fund to guarantee a reverse mortgage loan for the elderly. The government takes direct responsibility for any losses from these two funds.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSWHAT COULD MOVE THE RATINGS UPMoody’s could upgrade KHFC’s ratings if Korea’s sovereign rating is upgraded.WHAT COULD MOVE THE RATINGS DOWNMoody’s could downgrade KHFC’s ratings if (1) Korea’s sovereign rating is downgraded; (2) government support weakens, including for instance, inadequate capital contribution from the government; (3) the company’s role changes significantly, such that its importance to the government declines; or (4) the legal clauses that outline the government’s responsibility for KHFC’s solvency change.The principal methodology used in these ratings was Government-Related Issuers Methodology published in February 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1186207. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.Headquartered in Busan, Korea, KHFC was established on 1 March 2004. As of 31 December 2020, KHFC’s total assets and shareholders’ equity amounted to KRW153.6 trillion and KRW3.8 trillion, respectively.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. 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Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.The first name below is the lead rating analyst for this Credit Rating and the last name below is the person primarily responsible for approving this Credit Rating. 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