OREANDA-NEWS. Fitch Ratings has today assigned the Export-Import Bank of Korea's (KEXIM, AA-/Stable) proposed long-term senior unsecured US dollar-denominated notes an expected rating of 'AA-(EXP)'.

The notes may be issued in dual tranches under the bank's existing US shelf programme, which was last updated on 11 June 2015 at the US Securities and Exchange Commission. Fitch expects the size of the note issue to be about USD1bn and the tenors to be longer than five years.

The proceeds from the new issue will be used for the bank's general operations, including extending foreign-currency loans and repaying maturing debt and other obligations.

KEY RATING DRIVERS
SENIOR DEBT
The notes are rated at the same level as KEXIM's Long-Term Foreign Currency Issuer Default Rating (IDR) as they will constitute direct, unconditional, unsecured and unsubordinated obligations of the bank. The bank's IDR is equalised with South Korea's rating (AA-/Stable) to reflect the bank's policy role in the system and the government's de-facto solvency guarantee and commitment to hold a controlling stake in KEXIM.

KEXIM's key policy role is to provide export, import and overseas investment credit. According to Article 37 of the Export-Import Bank of Korea Act, the government is responsible for any losses incurred by the bank but not covered by the bank's reserves. KEXIM is effectively 100%-owned by the state (70.2% directly, 15.0% through Bank of Korea, and 14.8% through Korea Development Bank (AA-/Stable)).

RATING SENSITIVITIES
SENIOR DEBT
The bank's IDRs and senior debt ratings are sensitive to a change in Fitch's assumptions around the bank's relationship with South Korean government and South Korea's ratings. They would be directly affected by changes to South Korea's ratings or to the solvency guarantee under the KEXIM Act. Fitch does not expect any significant changes to either.