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Fitch Affirms SHINSEGAE's USD Guaranteed Notes at 'A'
April 13, 2017 / 9:21 AM / 8 months ago

Fitch Affirms SHINSEGAE's USD Guaranteed Notes at 'A'

(The following statement was released by the rating agency) HONG KONG, April 13 (Fitch) Fitch Ratings has affirmed South Korea-based SHINSEGAE Inc.'s USD300 million 2.625% guaranteed subordinated notes at 'A'. The affirmation reflects the credit enhancement provided to investors by the guarantee from Kookmin Bank (A/Stable). Fitch considers the first-call date when the guarantee would terminate as the effective maturity date of the securities. KEY RATING DRIVERS Kookmin Bank as Guarantor: The notes are rated at the same level as Kookmin Bank's Long-Term Issuer Default Rating (IDR), as its unconditional and irrevocable guarantee makes the notes the bank's direct, general, unsubordinated and unconditional obligations that rank at least pari passu with all its other present and future unsubordinated and unsecured obligations. Effective Maturity Date: Fitch views the first-call date as the effective maturity date. According to the terms of the notes, unless the notes have been fully redeemed before the first-call date in 2020, the first-call date would be the date when the guarantee would no longer be effective. Fitch assumes all bondholders will execute the notes' "no call put right" on the first call date - which states that if the issuer elects not to redeem the notes on the first call date, each holder has the right to sell the note in whole to the guarantor - due to the termination of the guarantee. SHINSEGAE's Credit Not Considered: SHINSEGAE's standalone credit strength is not considered in the rating of the notes, as the guarantee remains in force even if SHINSEGAE is declared bankrupt. DERIVATION SUMMARY SHINSEGAE's US dollar subordinated notes are unconditionally and irrevocably guaranteed by Kookmin Bank. As the rating of Kookmin Bank is unchanged, the rating of the guaranteed notes is affirmed. The notes are rated at the same level as Kookmin Bank's IDR as they are unconditionally and irrevocably guaranteed by the bank. RATING SENSITIVITIES Any change in Fitch's assessment of Kookmin Bank's ratings will result in an equivalent change in the rating of the notes, as the rating of the credit-enhanced notes is based solely on Kookmin Bank's guarantee. For the ratings of Kookmin Bank, the following sensitivities were outlined by Fitch in its rating action commentary dated 19 May 2016: The bank's IDRs, VR and senior debt ratings are sensitive to a change in Fitch's assumptions about Kookmin's company profile, operating environment, risk appetite and financial profile. The ratings could be upgraded if there is a sustainable and significant improvement in the bank's foreign-currency funding and liquidity profile. However, Fitch considers such prospects as remote, considering the challenging operating environment and Kookmin's negligible foreign-currency retail deposits. The ratings could be downgraded if there is a significant increase in the bank's risk appetite, including rapid growth or weakened loan quality, leading to erosion of its capitalisation. However, Fitch does not expect the quality of Kookmin's loans to weaken substantially. Contact: Primary Analyst Yee Man Chin Director +852 2263 9696 Fitch (Hong Kong) Limited 19/F Man Yee Building 68 Des Voeux Road Central, Hong Kong Secondary Analyst Cathy Chao Associate Director +852 2263 9967 Committee Chairperson Jeong Min Pak Senior Director +822 3278 8360 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: Additional information is available on Applicable Criteria Criteria for Rating Non-Financial Corporates (pub. 10 Mar 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. 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