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By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

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Rating Action:

Moody's rates KAL air cargo receivables deal A1 (sf)

27 Apr 2011

JPY20 billion of asset-backed securities rated

Hong Kong, April 27, 2011 -- Moody's Investors Service has assigned a definitive rating of A1 (sf) to the Secured Floating Rate Notes issued by KAL Japan ABS 6 Cayman Limited. The transaction is brought to the market by Daiwa Securities Capital Markets Co. Ltd., Seoul branch and The Korea Development Bank.

The complete rating action is as follows:

Issuer: KAL JAPAN ABS 6 CAYMAN LIMITED

.... JPY20 billion Secured Floating Rate Notes due 2014, Assigned A1 (sf)

RATINGS RATIONALE

The rating is based on an unconditional and irrevocable credit facility and an interest rate swap provided by the Korea Development Bank (KDB; A1/Prime-1/D) for the timely payment of scheduled principal and interest on the notes. As such, the rating on the notes is highly linked to the rating of KDB.

In assigning the definitive rating, Moody's considered a number of factors, among them:

1. the unconditional and irrevocable credit facility and the interest rate swap provided by the Korea Development Bank; and

2. the legal and structural protections in the transaction.

KAL Japan ABS 6 Cayman Limited -- a newly established, bankruptcy-remote, special purpose company incorporated in the Cayman Islands -- issues secured floating rate notes and uses the proceeds to acquire a Yen-denominated variable rate bond issued by the bond issuer, a limited liability special securitization company incorporated in Korea.

The bond issuer uses the proceeds to acquire an investor beneficiary certificate from the originator, Korean Air Lines Co., Ltd. (KAL). KAL entrusted to the Japanese trust a portfolio of Yen-denominated air cargo receivables on the entrustment date and a pre-funded reserve on the closing date in exchange for an investor beneficiary certificate and a seller beneficiary certificate issued by the Japanese trust.

The notes has a pre-defined monthly principal amortization schedule and bear an interest rate equals to one-month JPY-LIBOR plus a spread.

METHODOLOGY

Moody's analysis of the transaction is based primarily on the credit facility and the interest rate swap that KDB provide. KDB provides an unconditional and irrevocable Yen-denominated credit facility to the note issuer in exchange for a credit facility provider's fee and also enters into a fixed and floating interest rate swap to exchange a fixed Yen-denominated payment stream into a JPY-LIBOR Yen-denominated payment stream.

The initial commitment amount is designed to cover all the payments of principal on the notes, the fixed payments payable by the note issuer under the interest rate swap as well as an amount determined to cover the credit facility fees and the senior fees. The commitment amount also has a cushion to cover any extraordinary fees and expenses or any increase in fees denominated in currencies other than Yen due to changes in the exchange rate.

The maximum amount that can be drawn on the credit facility at closing will be capped at the initial commitment amount of JPY20.76 billion. The commitment amount will be reduced by an amount equal to the actual note principal payments, the swap payment, senior fees and expenses, and the credit facility fees, but not the amount set to cover extraordinary senior fees and expenses. This structure provides a buffer that will cover the payment of any extraordinary items.

The notes benefits from the committed credit facility until maturity, for a term of three years. The obligations of KDB as the credit facility provider cannot be cancelled, waived, or varied prior to the discharge in full of the outstanding amount of the notes. Also, any failure to pay the credit facility provider's fee will not prejudice the rights of the note issuer or relieve the credit facility provider of its obligations under the credit facility arrangement.

Furthermore, KDB's obligations to the note issuer under the credit facility agreement will not be discharged, impaired, or otherwise affected by:

• the making or absence of any demand on the note issuer for payment;

• the winding-up of the note issuer; or

• any of the note issuer's obligations under the notes or the note trust deed becoming illegal, invalid, unenforceable, or ineffective.

The commitment amount of the credit facility is fixed and the rated notes bear one-month JPY-LIBOR plus a spread. The interest rate swap with KDB mitigates any interest rate mismatch between the fixed commitment amount in the credit facility and the floating amount payment obligation in the notes.

The rating on the notes will be linked to KDB's, as the transaction's credit quality depends on KDB's ability to fulfill its obligations under the credit facility deed and the interest rate swap. Consequently, any change to KDB's rating will result in a corresponding change to the rating on the notes.

Moody's Investors Service did not receive or take into account a third party due diligence report on the underlying assets or financial instruments in this transaction.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, and public information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of assigning a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit 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 ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service 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 the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Hong Kong
Jerome Cheng
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service Hong Kong Ltd.
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Tokyo
Koji Kumamaru
MD - Structured Finance
Structured Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

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 rates KAL air cargo receivables deal A1 (sf)
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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​​​​
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