OREANDA-NEWS. Fitch Ratings has downgraded the Long-Term Local-Currency Issuer Default Rating (IDR) of Small Business Corporation (SBC) to 'AA-' from 'AA' following a downgrade of the Long-Term Local-Currency IDR on Korea. The Outlook is Stable.

Fitch on 22 July 2016 downgraded Korea's Long-Term Local-Currency IDR to 'AA-' from 'AA' following a revision in its Sovereign Rating Criteria. (see Fitch Applies Criteria Changes to Global Sovereign Ratings dated 22 July 2016).

KEY RATING DRIVERS

SBC's ratings are assessed on a top-down basis as per Fitch's public-sector entity rating criteria. The ratings are equalised with the ratings of South Korea due to SBC's strong links to the sovereign and high probability of extraordinary government support, if needed. SBC's policy is dictated and closely monitored by the government of Korea. Under Fitch's public-sector entities rating criteria, SBC is classified as a credit-linked entity.

RATING SENSITIVITIES

A positive rating action on the sovereign, in conjunction with continued strong support from the state, would lead to a similar change in SBC's rating.

A sovereign downgrade, significant changes that would lead to a dilution in state ownership and public control, or evident weakening of links with the government, including erosion of the importance of the SME Fund's public-policy role and budgeting relationship with the government, could trigger a downgrade. SBC operates the SME Fund.