Moody's: Shinsegae unchanged

Moody's Investors Service said it sees no impact on the A3 issuer and senior unsecured bond ratings of Shinsegae Co. Ltd. following news that its board of directors had approved a demerger plan.

The board approved the company's plan to split into two entities, respectively operating hypermarkets (E-Mart) and department stores (Shinsegae), the agency said. The demerger will become effective May 1, subject to the approval of shareholders.

The rated $200 million bonds due 2011 will be transferred to E-Mart, which will become the rated entity following the demerger.

The rating on the bonds will remain intact, as the two entities will be jointly liable for all debt incurred before the demerger, Moody's said.

The agency said it expects that E-Mart's credit profile will remain in line with the A3 rating, given E-Mart's leadership position in Korea and the low cyclicality apparent in its hypermarket business.

And although the demerger will increase E-Mart's business concentration, any weakening in its business fundamentals should be fairly modest, Moody's added.

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