Fitch rates Gazprom notes BB

Fitch Ratings assigned a BB rating to OAO Gazprom foreign currency senior unsecured debt, local currency debt and its new $5 billion loan participation notes program via Gaz Capital SA.

Fitch said positives for Gazprom's ratings are its regulatory and tariff setting environment, improving debt structure, improving production risks, strong linkages to the state (significant 38% stake, strong operational and financial influence), improving corporate governance and size and scale.

Negatives include risks inherent to limited export routes, increasing cash costs, volatility in export earnings and relatively high financial leverage.

Moody's rates Korea Export Credit notes B3

Moody's Investors Service assigned a B3 rating to Korea Exchange Bank Credit Service's proposed $100 million subordinated notes due 2013. The outlook is stable.

Moody's said the rating reflects the company's limited capability to service its debt obligations, given its fragile financial fundamentals in a weak credit card industry environment and the subordinated status of the notes. This issue is rated two notches below Korea Exchange Bank Credit's senior obligations because of the correspondingly higher expected loss in the event of liquidation that is typical of subordinated debt at this rating level.

Korea Exchange Bank Credit is now the fifth largest credit card issuer in Korea, in terms of 2002 transaction volume, with 5% market share. The company is dominant in revolving cards and platinum cards.

Recognizing its relatively small size as a constraint, Korea Exchange Bank Credit aims to retain its strong presence in these niche segments, Moody's said. Moreover, it has identified these segments to be more profitable.

The company's credit risks include: its poor asset quality, negative profitability and tight liquidity situation, Moody's added. Although delinquency ratios have improved and are showing signs of stabilizing, they remain high with potential for additional losses near term. This will continue to impair profitability and capital levels. Moreover, the tight liquidity position faced by the company, as well as the rest of the industry, is expected to persist near term, thereby raising the company's credit risk profile.

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