Fitch Affirms Doosan Heavy's USD500 Million Guaranteed Notes at 'AA-'

Doosan Enerbility Co

27/02/2020 07:50

(The following statement was released by the rating agency)


Fitch Ratings-Hong Kong-February 27: 

Fitch Ratings has affirmed the rating on South Korea-based Doosan Heavy 
Industries  Construction Co., Ltd.'s (DHIC) USD500 million 2.125% guaranteed 
notes at 'AA-'. The rating reflects the credit enhancement provided to investors 
by the guarantee from The Export-Import Bank of Korea (KEXIM, AA-/Stable). 

Key Rating Drivers

KEXIM as Guarantor: The rating reflects the unconditional and irrevocable 
guarantee from KEXIM. The notes are rated at the same level as KEXIM's Long-Term 
Issuer Default Rating (IDR), as its guarantee makes the notes the bank's direct, 
general, unsubordinated and unconditional obligations, and they rank at least 
pari passu with all other present and future subordinated and unsecured 
obligations of KEXIM.

DHIC's Credit Not Considered: DHIC's standalone credit strength is not a 
consideration in the instrument rating as the guarantee remains in force even if 
DHIC is declared bankrupt.

Derivation Summary

The ratings on the credit-enhanced bonds are based solely on KEXIM's guarantee.

RATING SENSITIVITIES

Since the rating on the credit-enhanced bonds is based solely on KEXIM's 
guarantee, any change in Fitch's assessment will result in an equivalent change 
in the rating of the bond.

For the ratings on KEXIM, the following sensitivities were outlined by Fitch in 
its Rating Action Commentary published on 19 June 2019:

KEXIM's IDRs, Support Rating, Support Rating Floor and senior debt ratings are 
sensitive to changes in the sovereign's ability to support the bank. Hence, they 
would be directly affected by changes to South Korea's ratings (AA-/Stable). 

The ratings are also sensitive to changes in Fitch's assumptions about the 
bank's relationship with the South Korean government, and the government's 
propensity to support the bank. For example, significant changes to the solvency 
guarantee under the KEXIM establishment act may lead to a reassessment of the 
ratings. However, Fitch does not expect any significant changes to this in the 
near to medium term.

Doosan Heavy Industries & Construction Co., Ltd.

----guaranteed; Long Term Rating; Affirmed; AA-

Contacts: 

Primary Rating Analyst

Tyran Kam, 

Director

+852 2263 9909

Fitch (Hong Kong) Limited

19/F Man Yee Building 60-68 Des Voeux Road Central

Hong Kong

Secondary Rating Analyst

Sunny Zhuang, 

Senior Analyst

+86 21 6898 8090

Committee Chairperson

Kalai Pillay, 

Managing Director

+65 6796 7221

 

Media Relations: Alanis Ko, Hong Kong, Tel: +852 2263 9953, Email: 
alanis.ko@thefitchgroup.com; Wai Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: 
wailun.wan@thefitchgroup.com.

Additional information is available on www.fitchratings.com

Applicable Criteria 

Corporate Rating Criteria (pub. 19 Feb 2019)

https://www.fitchratings.com/site/re/10062582

Country-Specific Treatment of Recovery Ratings Criteria (pub. 18 Jan 2019)

https://www.fitchratings.com/site/re/10058988

Additional Disclosures 

Dodd-Frank Rating Information Disclosure Form 

https://www.fitchratings.com/site/dodd-frank-disclosure/10111858

Solicitation Status 

https://www.fitchratings.com/site/pr/10111858#solicitation

Endorsement Policy 

https://www.fitchratings.com/regulatory

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