TEXT-Fitch Rates Korea Development Bank's Senior Unsecured AUD Notes 'AA-(EXP)'

Mon Dec 3, 2012 9:02pm EST

(The following was released by the rating agency)

SEOUL/HONG KONG, December 04 (Fitch) Fitch Ratings has assigned Korea Development Bank's (KDB) proposed long-term senior unsecured AUD-denominated notes an expected 'AA-(EXP)' rating. The issue size is AUD400m and tenor is three years.

The proceeds will be used for KDB's general operations, including repayment of maturing debt and other obligations. The final rating is contingent upon the receipt of final documents conforming to the information already received.

The notes are rated at the same level as KDB's Long-Term Issuer Default Rating as they will constitute direct, unconditional, unsecured and unsubordinated obligations of the bank. The bank's IDR is equalised with South Korea's sovereign rating, reflecting de facto solvency guarantee by the government for KDB as per Article 44, KDB Act.

As such, the rating will be directly impacted by changes in the sovereign rating. KDB is one of the key policy banks in South Korea and 100%-owned by the government through KDB Financial Group. Although KDB has been slated for privatisation since 2008, Fitch views that the bank is unlikely to complete the exercise in the foreseeable future.

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