Fitch rates Korea Development Bank notes A+

Fitch Ratings said it assigned Korea Development Bank's (A+/stable) planned senior unsecured floating-rate notes an expected rating of A+. The issue size is not yet confirmed, but is expected to be around €500 million.

Fitch said the bank's A+ issuer default rating is in line with that of the Republic of Korea, reflecting the bank's quasi-sovereign status. The bank is 100% state-owned and is a leading policy body of the Korean government, supporting its policies by funding industrial development and raising funds on behalf of the government in international markets. The Korean government is obliged to maintain the bank's solvency and is, in Fitch's view, strongly committed to ensuring that the bank is able to meet its obligations in a timely manner.

In line with its robust operating performance, the government amended an article in July 2005 that will allow the bank to pay dividends to its shareholder (the Korean government) from its annual net income. Accordingly, the bank is expected to pay a KRW 380 billion dividend in March. Despite this change, Fitch said it believes the government remains strongly committed to maintaining the bank's capital at an adequate level.

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