Bangkok--13 Dec--Moody's
Moody's Investors Service has assigned a definitive rating of A3 to the senior floating rate notes (the "senior notes") issued by Asian Bond Fund II (Cayman) Limited. Moody's rating on the senior notes is closely linked to the rating of the Korea Development Bank ("KDB"), who provides an unconditional and irrevocable credit facility to the issuer in support of its obligations under the senior notes. The complete rating action is as follow: Issuer: Asian Bond Fund II (Cayman) Limited
Yen 5,929 million Senior Floating Rate Notes due 2009, rated A3 The rating addresses the expected loss posed to the investors by the legal final maturity. The structure allows for timely payments of interest and principal. The expected loss only takes into account the scheduled yield and the principal repayment on the notes.
Moody's rating addresses only the credit risks associated with the transaction. Other non-credit risks have not been addressed, but may have a significant effect on yield to investors. In assigning the rating, Moody's considered, among other things, the following factors:
1. the unconditional and irrevocable credit facility provided by KDB;
2. the interest rate swap with Nomura Global Financial Products Inc. and Nomura Securities Co., Ltd. (A2/P-1) as the swap counterparty and swap guarantor respectively; and
3. the legal and structural protections in the transaction.
TRANSACTION SUMMARY
The issuer uses the proceeds from the issuance of the senior notes, together with the issuance of mezzanine and junior notes, to acquire a portfolio of Yen-denominated Eurobonds with warrants issued by small- and medium-sized enterprises ("SMEs") in Korea. The seller of the portfolio is Daishin Securities Co., Ltd..
KDB (A3/P-1/D-) provides an unconditional and irrevocable credit facility for timely interest payments to the swap provider and timely principal payments on the senior notes. The facility also covers all senior fees and expenses of the issuer. Hence, the rating of the senior notes is highly correlated to the rating of KDB.
In addition, there is an interest rate swap to mitigate the interest rate mismatch between the fixed rate received from the SME bonds and the Yen Libor-linked floating rate paid on the senior notes.
A more detailed analysis of the transaction is available at Moody's website: http://www.moodys.com .
THE COMPANIES
The issuer is a bankruptcy-remote, special purpose company incorporated in the Cayman Islands. KDB is 100% owned by the Korean Government with a paid-in capital of about KRW 8,242 billion as at the end of December 2005.
Moody's Investors Service is a publisher of rating opinions and research.
It is not involved in the offering or sale of any securities, nor is it acting on behalf of the offering party. This release is not a solicitation or a recommendation to buy, hold or sell securities.
Hong Kong
Min Ye
Managing Director
Structured Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 2916-1121
Hong Kong
Marie Lam
Vice President - Senior Analyst
Structured Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 2916-1121