Standard & Poor’s Ratings Services has assigned its ‘A-‘ senior unsecured debt rating to the Export-Import Bank of Korea’s (Kexim; foreign currency A-/Stable/A-2; local currency –/–/A-1) US$300mn Euro medium-term notes (MTN) due November 27, 2007. The notes will be fungible with and are intended to form a single series with the bank’s existing US$700mn 4.25% Euro MTN series 1 due November 27, 2007, and will be drawn down from Kexim’s US$2bn Euro MTN Program, also rated ‘A-‘.

Standard & Poor’s issuer credit ratings on Kexim are based on its public policy role as Korea’s official export credit agency, providing financial facilities in support of the Korean government’s (local currency rating A+/Stable/A-1; foreign currency rating A-/Stable/A-2) export-led growth strategy, and foreign trade and investment policies. The bank is government-owned and supervised by the Ministry of Finance and Economy (MoFE).

The ratings also incorporate the strong direct support of the Korean government, including capital injections and provision of loans, and the government’s legal obligation to maintain the bank’s solvency. Standard & Poor’s, however, regards this statutory obligation as only a sign of the government’s commitment to support Kexim, rather than a direct guarantee of timely payment for all of the bank’s obligations.

“Taking into account the bank’s robust public policy role and the strong support from the Korean government, Standard & Poor’s equalises its ratings on Kexim with those on the sovereign”, says Chih Wai Liew, sovereign credit analyst at Standard & Poor’s.

Standard & Poor’s expects Kexim’s public policy role to remain intact in the near-to-medium term, as the Korean government is expected to remain engaged in active economic management. Nevertheless, Kexim’s role could be eroded if the government were to embrace a more far-reaching, laissez faire attitude toward economic development in the longer term.