Rating Action: Moody's rates Aa2/Aaa.mx KEXIM's certificados bursátiles; outlook stable
Global Credit Research - 13 Jan 2021
Mexico, January 13, 2021 -- Moody's de México S.A. de C.V, ("Moody's") has today assigned Aaa.mx long-term foreign currency senior unsecured debt rating in the Mexican national scale and Aa2 in the global scale to Export-Import Bank of Korea's (The) (KEXIM) proposed issuance of Certificados Bursátiles (cebures) (KEXIM 21). The outlook on the global scale rating is stable.
The maximum amount of the issuance will be MXN10 billion, while the target amount will be MXN6 billion. KEXIM 21 will have a maturity about five years and a floating coupon based on Mexico's 28-day equilibrium interbank interest rate (TIIE 28). The notes will be governed by Mexican law.
LIST OF AFFECTED RATINGS
The following long-term senior unsecured debt ratings were assigned to Export-Import Bank of Korea (The)'s (2297) proposed issuance of Certificados Bursátiles (KEXIM 21):
.Long-term global foreign currency senior unsecured debt rating of Aa2, stable outlook
.Long-term Mexican National Scale foreign currency senior unsecured debt rating of Aaa.mx
KEXIM's Aa2 and Aaa.mx senior unsecured debt ratings are at the same level as the Government of Korea's Aa2 rating and incorporate the following considerations: (1) Article 37 of the KEXIM Act, that holds the government responsible for the bank's solvency; (2) the government's 100% ownership of the bank; (3) the absence of legal barriers to timely support; and (4) KEXIM's close affiliation with the government, given the bank's status as a government-controlled policy bank.
Moody's views that extraordinary government support is near certain based on: (1) KEXIM's public policy mandate to support Korea's export and import sectors, which aligns its interest with that of the government; (2) the direct influence exerted by the government on KEXIM's operations through the appointment of board members and management; (3) the track record of the government providing frequent equity capital injection; and (4) Moody's view that KEXIM's default would substantially damage the government's reputation and impair its ability to achieve its policy objectives.
The ratings also take into consideration Korea's very high institutional strength and fiscal strength, which support KEXIM's role as a de facto foreign currency benchmark issuer for other Korean issuers.
All principal and interest on the cebures will be payable in Mexican pesos. In the event the Mexican peso is unavailable, KEXIM has the commitment to provide US dollars for payment. This supports the cebures' rating in line with that of other senior obligations of KEXIM.
The Aaa.mx national scale rating is the sole Mexican national scale rating corresponding to the cebures' Aa2 global scale rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The global scale rating of the cebures is likely to be upgraded if Korea's sovereign rating is upgraded. Conversely, it is likely to be downgraded if (1) Korea's sovereign rating is downgraded; (2) there is evidence of weakening government support for KEXIM; (3) KEXIM's strategic role and importance to Korea weaken; or (4) its role as a de facto foreign currency benchmark issuer weakens. An upgrade of the global scale rating of the cebures is unlikely to lead to a change in the Mexican national scale rating. Only a downgrade of more than five notches of the global scale rating would lead to a downgrade of the Aaa.mx rating of the cebures.
The long-term Mexican National Scale rating of Aaa.mx indicates issuers or issues with the strongest creditworthiness relative to other domestic issuers.
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.mx for a copy of this methodology.
The Export-Import Bank of Korea is headquartered in Seoul and reported assets of KRW104.4 trillion ($86.8 billion) at the end of June 2020.
The period of time covered in the financial information used to determine The Export-Import Bank of Korea's rating is between 1 January 2016 and 30 June 2020 (source: Moody's, as well as issuer's annual audited and semiannual unaudited financial statements).
Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale credit ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. For further information on Moody's approach to national scale credit ratings, please refer to Moody's Credit rating Methodology published in May 2016 entitled "Mapping National Scale Ratings from Global Scale Ratings". While NSRs have no inherent absolute meaning in terms of default risk or expected loss, a historical probability of default consistent with a given NSR can be inferred from the GSR to which it maps back at that particular point in time. For information on the historical default rates associated with different global scale rating categories over different investment horizons, please see https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1216309.
For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
Information sources used to prepare the rating are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's information.
The ratings have been disclosed to the rated entity prior to public dissemination.
A general listing of the sources of information used in the rating process, and the structure and voting process for the rating committees responsible for the assignment and monitoring of ratings can be found in the Disclosure tab in www.moodys.com.mx.
The date of the last Credit Rating Action was 29/7/2019.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.mx.
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In compliance with regulatory requirements, Moody's de Mexico has been informed that within the two-month period prior to the date hereof, HR Ratings de México, S.A. de C.V. has assigned a rating of HR AAA on the same securities referred to in this press release.
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The below contact information is provided for information purposes only. Please see the ratings tab of the issuer page at www.moodys.com.mx, for each of the ratings covered, Moody's disclosures on the lead rating analyst and the Moody's legal entity that has issued the ratings.
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Please see ratings tab on the issuer/entity page on www.moodys.com.mx for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see our website www.moodys.com.mx for further information.
Please see www.moodys.com.mx for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
The ratings issued by Moody's de Mexico are opinions regarding the credit quality of securities and/or their issuers and not a recommendation to invest in any such security and/or issuer.
Please see the ratings tab on the issuer/entity page on www.moodys.com.mx for additional regulatory disclosures for each credit rating.
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