Fitch Rates IBK's Senior Unsecured Euro Notes 'AA-(EXP)'

Reuters

SEOUL/HONG KONG, October 23 (Fitch) Fitch Ratings has assignedIndustrial Bank of Korea's (IBK) proposed long-term senior unsecuredeuro-denominated notes an expected rating of 'AA-(EXP)'. IBK is expected to issue EUR500mof five-year notes, though this is subject to change depending on the marketsituation. The notes will be issued under the bank's existing USD8bn GlobalMedium Term Note Programme, last updated on 29 March 2013 at the SingaporeExchange Securities Trading Limited. The proceeds from the issue will beused for the bank's general purposes, including rolling over and/or repayingmaturing foreign currency debt and other obligations. The final rating iscontingent upon the receipt of final documents conforming to the information alreadyreceived. KEY RATING DRIVERS The notes are rated at the same level as IBK's Long-TermForeign-Currency Issuer Default Rating (IDR) as they will constitute direct,unconditional, unsecured and unsubordinated obligations of the bank. The bank's IDR isequalised with South Korea's sovereign rating to reflect the de facto solvencyguarantee. According to Article 43 of the Industrial Bank of Korea Act, thegovernment is responsible for any losses incurred by the bank but not coveredby the bank's reserves. IBK is 72.3%-owned by the state (68.84% directly,1.91% through Korea Finance Corporation (AA-/Stable), and 1.55% throughExport-Import Bank of Korea (AA-/Stable)). RATING SENSITIVITIES The ratings of IBK would be directly affected by a change toSouth Korea's sovereign ratings or a major change in IBK's relationship withthe government (for example, a change to the solvency guarantee under the IBKAct). Fitch does not expect any significant change to either in the foreseeablefuture. IBK is one of South Korea's policy banks. Its mandate is toprovide credit to SMEs, and it focuses on small but viable manufacturingcompanies. Korea's government announced a stop to the privatisation of IBK in lateAugust 2013, affirming IBK's importance in supplying funds to SMEs,especially when the system is under stress. That said, the government wants toreduce its stake in IBK to fund its spending plans, especially in improving socialwelfare.Contact: Primary AnalystHeakyu Chang Director+82 2 3278 8363Fitch Ratings Limited9F Kyobo Securities Building, 26-4 Youido-Dong,Youngdeungpo-Gu, Seoul, Korea Secondary Analyst Mihwa Park Associate Director+82 2 3278 8372 Committee ChairpersonTim RocheSenior Director+612 8256 0310 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935,Email: wailun.wan@fitchratings.com.Additional information is available on www.fitchratings.com Applicable criteria, "Global Financial Institutions RatingCriteria", dated 15 August 2012, are available at www.fitchratings.com.Applicable Criteria andALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS ANDDISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THISLINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION,RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLEON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS,CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'SCODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATEFIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLEFROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHERPERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES.DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN ANEU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUERON THE FITCH WEBSITE.

View Comments (0)