Moody’s lifts Korean Air Lines notes to Aa2

Moody's Investors Service said it upgraded the rating of Korean Air Lines Co., Ltd.'s (unrated) senior unsecured notes guaranteed by the Export-Import Bank of Korea (Kexim, Aa2 stable) to Aa2 from Aa3.

The outlook was changed to stable from positive.

Moody’s said the action follows its Dec. 21 decision to upgrade Kexim's long-term foreign currency senior unsecured ratings to Aa2 from Aa3 and change the outlook to stable from positive.

Kexim's upgrade in turn follows the agency’s Dec. 18 decision to upgrade the Korean government's issuer and senior unsecured ratings to Aa2 from Aa3. It also changed the outlook to stable from positive.

Moody’s said the upgrade of the note rating to Aa2 is because:

• Kexim provides an unconditional and irrevocable guarantee on the notes until the first call date, which is three years from the date of issuance;

• The guarantee will rank pari passu with all other present and future unsecured and unsubordinated obligations of Kexim; and

• Kexim is mandatorily required to purchase the notes until the first call date – including the principal amount, any accrued interest, and outstanding deferred interest payment – from note holders in the event of Korean Air Lines’ bankruptcy or should the airline decide not to redeem the notes on the first call date.

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