• On 21 May 2013, Moody’s announced rating actions on MBIA Insurance Corp., National Public Finance Guarantee Corp., MBIA Inc. and other related entities. Because of the large number of credits across several asset classes affected by these rating actions, including Moody's-rated securities that are guaranteed or "wrapped" by these companies, ratings appearing on this website may not yet reflect current information. For current information on affected credits, please visit www.moodys.com/fig.
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Announcement:

Moody's Disclosures on Credit Ratings of Export-Import Bank of Korea (The)

Global Credit Research - 02 May 2012

Hong Kong, May 02, 2012 -- The following release represents Moody's Investors Service's summary credit opinion on Export-Import Bank of Korea and includes certain regulatory disclosures regarding its ratings. This release does not constitute any change in Moody's ratings or rating rationale for Export-Import Bank of Korea (The).

Moody's current ratings on Export-Import Bank of Korea (The) are:

Senior Unsecured (foreign currency) ratings of A1

Senior Unsecured MTN Program (foreign currency) ratings of (P)A1

Senior Unsecured Shelf (foreign currency) ratings of (P)A1

Commercial Paper (foreign currency) ratings of P-1

Other Short Term (foreign currency) ratings of (P)P-1

BACKED Senior Unsecured (foreign currency) ratings of A1

BACKED Senior Unsecured Shelf (foreign currency) ratings of (P)A1

RATINGS RATIONALE

In accordance with Moody's methodology for government-related issuers, we have assigned an "A1" foreign currency long-term issuer rating to Export Import Bank of Korea (KEXIM). The rating incorporates three factors: (1) baseline credit assessment (BCA) of 11, which maps to ba1 on the long-term scale, (2) very high level of support from the government, (3) very high level of dependence, and (4) Korea's A1 sovereign bond rating as a systemic support indicator.

The main driver of the A1 rating - six notches higher than its ba1 BCA - is our assessment that the government is highly likely to support KEXIM in a timely manner if needed.

KEXIM's ba1 standalone BCA reflects its intrinsic financial strength and does not incorporate any form of external extraordinary support it may receive. But the BCA takes into account the ordinary and ongoing support from the government.

The BCA indicates our opinion of the likelihood of the bank requiring extraordinary support. In addition, we consider KEXIM's ability to meet its funding requirement via the domestic and international debt capital markets as favorable due to its reputation as a government agency.

The very high level of government support we assume is underpinned by: [1] the stipulation in the KEXIM Act that holds the government responsible for the bank's solvency, [2] the 100% ownership by the government, [3] no legal barrier for timely support, [4] KEXIM's close affiliation with the Korean government as a government-controlled policy bank, and [5] its important policy role in supporting the Korean export sector. Its ratings also incorporate the high probability that the bank will maintain this strategic role, given the importance of the export sector in the Korean economy.

The very high level of dependence reflects: [1] KEXIM's function as a policy arm of the government to promote the national economic development by providing foreign currency funding or guarantees to key export-import sectors, [2] the very high level of revenue-sharing with the government, and [3] very high level of common credit risks that it shares with the government, especially in terms of foreign exchange rate and political event risks.

We believe that the government ownership and support are very likely to continue, given KEXIM's importance to the Korean export industry, which in turn plays a critical role in the country's economy. For example, the government increased the bank's paid-in capital by KRW2.25 trillion, or 57% over 2009-2011, as the bank expanded its credit to assist the export-import sector during the financial crisis in 2008-09.

KEXIM expanded its total balance of credit to KRW88.7 trillion in 2011, from KRW83.5 trillion in 2010. Moreover, the bank has an important role as a foreign-currency liquidity provider to domestic banks. KEXIM was also an intermediary of the government-guarantee program to facilitate foreign-currency borrowing at domestic banks during the financial crisis. Hana Bank utilized the program and issued US$1 billion in government-guaranteed bonds in 2009.

Rating Outlook

The outlook for the bank's long- and short-term foreign currency debt ratings is positive, in line with the outlook for Korea's sovereign rating.

What Could Change the Rating - Up

We would be likely to upgrade the ratings if the sovereign ratings are upgraded.

What Could Change the Rating - DOWN

We would consider downgrading the ratings if: (1) the sovereign ratings are downgraded, (2) the bank's standalone BCA falls below the B1 rating. or, (3) there is a large increase in KEXIM's debt burden without a corresponding increase in the government's capital.

The methodologies used in this rating were Government-Related Issuers: Methodology Update published in July 2010, Incorporation of Joint-Default Analysis into Moody's Bank Ratings: Global Methodology published in March 2012, and Short-Term Prime Ratings published in June 2010. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt 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 relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The rating has been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

Information sources used to prepare the rating are the following : parties involved in the ratings, public information and confidential and proprietary Moody's Investors Service information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com 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 the ratings disclosure page on our website www.moodys.com for further information.

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.

Hyun Hee Park
Analyst
Financial Institutions Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Stephen Long
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Moody's Disclosures on Credit Ratings of Export-Import Bank of Korea (The)
No Related Data.

 

© 2013 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

 


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