(The following statement was released by the rating agency)
Oct 08 - Fitch Ratings has assigned Korea-based Doosan Infracore Co., Ltd.'s(DI) USD500m capital securities a final rating of 'A-'.
The final rating follows the receipt of documents conforming to informationalready received, and is in line with the expected rating assigned on 14September 2012.
The rating reflects the credit enhancement provided to investors by KoreaDevelopment Bank ('AA-'/Stable), Woori Bank ('A-'/Stable) and Hana Bank.Investors in the securities are granted the right to put the securities to CorePartners Limited, a special purpose company unrelated to DI. The abovementionedbanks provide a five-year irrevocable and unconditional commitment via a creditagreement to lend Core Partners an amount sufficient to meet its putobligations. This amount includes the then outstanding principal and anyaccumulated distribution payments.
Investors can exercise the put if DI fails to redeem the securities at the endof the fifth year, when the distribution rate steps up by 500 basis points.Investors also have the right to put the securities prior to that in a number ofother instances, including the bankruptcy of DI.
In rating the securities, Fitch has taken the view that investors will exercisethe put option at the end of the fifth year if DI chooses not to redeem thesecurities. As a result, the rating reflects the banks' commitment to fund CorePartners to meet its put obligations to the investors. However, the rating iscapped at the lowest of Fitch's assessments of the banks due to the several butnot joint obligations of the banks under the credit agreement. Any change in thelowest of Fitch's assessments of the banks will result in an equivalent changeto the instrument rating.
DI's standalone credit strength is not a consideration in the instrument ratingas the credit agreement remains in force even if DI is declared bankrupt. Fitchnotes, however, that DI may elect to defer distribution payments during thecredit agreement period without triggering the put option. Investors willreceive any deferred distributions only upon the exercise of the put option.