Moody's rates Hynix bond B1

Moody's Investors Service said it assigned its prospective Ba3 senior implied rating and prospective B1 senior unsecured rating to Hynix Semiconductor Inc.'s proposed bond issuance.

The outlook is stable.

The bond proceeds will be used to refinance existing debt due in 2006, which has received the approval of creditors for early repayment.

Moody's said the prospective Ba3 rating reflects Hynix's four credit strengths: (1) position as the world's second largest DRAM manufacturer; (2) cost competitiveness; (3) position in the fast growing NAND flash segment; and (4) improving balance sheet and financial flexibility.

At the same time, the rating reflect the following key challenges: (1) unpredictable cash flow stemming from highly volatile nature of DRAM pricing and the silicon cycle; (2) participation in a capital-intensive industry, and which requires massive capex requirements for technological migrations; and (3) track record of liquidity crises and bailouts, partially mitigated by its improved balance sheet liquidity.

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