OREANDA-NEWS. Fitch Ratings has affirmed Korea-based Doosan Infracore Co Ltd's (DI) USD500m capital securities at 'A-'.

The rating reflects the credit enhancement provided to investors by the banks offering the credit facility.

KEY RATING DRIVERS

Credit Enhancement by Banks: The rating reflects the credit enhancement provided to investors by Korea Development Bank (AA-/Stable), Woori Bank (A-/Stable) and KEB Hana Bank (A-/Stable). Investors have the right to put the securities to Core Partners Limited, a special-purpose company unrelated to DI. The banks provide a five-year irrevocable and unconditional commitment via a credit agreement to lend Core Partners Limited an amount sufficient to meet its put obligations. This amount includes the outstanding principal at the time and any accumulated distribution payments.

Put Option: Investors can exercise the put option if DI fails to redeem the securities at the end of the fifth year (2017), when the distribution rate steps up by 500bp. Investors also have the right to exercise the put option in some other instances prior to the fifth year, including the bankruptcy of DI.

Rating Reflects Banks' Commitment: Fitch takes the view that investors will exercise the put option at the end of the fifth year (2017) if DI does not redeem the securities. The rating reflects the banks' commitment to fund Core Partners Limited to meet its obligations to the investors as a result. However, the rating is capped at the lowest of Fitch's assessments of the banks due to the banks' several, but not joint, obligations under the credit agreement.

DI's Credit Not Considered: DI's standalone credit strength is not considered in rating the securities as the credit agreement remains in force even if DI is declared bankrupt. However, DI may elect to defer distribution payments during the credit agreement period without triggering the put option. Investors will receive any deferred distributions only upon the exercise of the put option.

RATING SENSITIVITIES

Fitch will downgrade the rating of the securities in similar magnitude to any downgrade of the lowest-rated bank offering the credit facility.

Fitch will upgrade the ratings of the securities in similar magnitude to any upgrade of the lowest-rated bank offering the credit facility.