S&P rates Korea Exchange Bank bonds BBB-

Standard & Poor’s said it assigned a BBB- rating to Korea Exchange Bank’s $300 million subordinated bonds.

The bonds have a coupon rate of 4.25% and are due Oct. 14, 2024.

The bank drew down the bonds from its $4 billion global medium-term program, S&P said.

The subordinated notes are intended as Basel III tier 2 regulatory capital for the bank and will be direct, unsecured and subordinated to senior creditors’ claims, the agency said.

The BBB- rating is one notch below the bank’s BBB stand-alone credit profile. The notching reflects the risk related to subordination, S&P said, but it does not reflect the risk of write-down and waiver of principal and interest payments upon the occurrence of a non-viability event.

The agency also said it believes the bank will likely receive extraordinary support from the government in a preemptive manner and at a relatively early stage if they were to come under financial stress, based on the government’s track record.

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