Fitch Ratings has issued a presale report on Hai Jiao 1400 Limited's
guaranteed notes. Fitch expects to rate the notes as follows:
--$200,000,000 fixed rate secured notes due 2025 'AA-sf(EXP)'; Outlook
Proceeds of the Hai Jiao 1400 Limited (the issuer) notes will be used,
in conjunction with a commercial loan from the Export Import Bank of
Korea (KEXIM; Issuer Default Rating [IDR] 'AA-'/Outlook Stable/'F1+'),
by the issuer to finance the purchase of two liquefied natural gas
vessels. Along with the loan, the proceeds of the secured notes will be
used to finance a portion of the contract price of the two liquefied
natural gas vessels.
The indenture trustee, Wilmington Trust, National Association (IDR 'A
'/Outlook Stable/'F1') and KEXIM entered into a guarantee agreement
whereby KEXIM guarantees, in favor of the indenture trustee, principal,
accrued and unpaid interest due on the outstanding notes, should the
issuer miss a payment. KEXIM will also pay interest accrued on the
amount due through the payment date, as there could be a lag of up to 14
business days between a missed payment and the date the payment is made.
If KEXIM opts to accelerate its payment of the outstanding principal
amount of the notes, it may also be obligated make any applicable make
KEY RATING DRIVERS
The rating of the notes is credit-linked to KEXIM's long-term IDR as
guarantor. Fitch has not formed a credit opinion on the underlying
borrowers, the issuer, or the parent guarantors.
The analysis does not rely on cash flows received from the underlying
loans, nor the mortgaged vessels, and therefore there is no reliance on
the isolation of assets for the purposes of this analysis. In addition,
the issuer is not deemed to be bankruptcy remote pursuant to Fitch's
Global Structured Finance Rating Criteria, and therefore, in Fitch's
view, the issuer is not structured to be isolated from bankruptcy risk.
Fitch's analysis recognizes that the transaction is structured so that
any payments made by the borrowers under the loan and KEXIM under the
guarantee to the Trustee are isolated from the issuer and its parents,
affiliates and subsidiaries.
The indenture allows for up to a 14 business day delay in payment. As
described in Fitch's Criteria for Rating Caps and Limitations in Global
Structured Finance Transactions, Fitch generally will not assign a high
investment grade rating to notes that exhibit significant vulnerability
to interest deferrals. Given that interest will accrue on the notes
during any delay period, Fitch believes that the noteholders will be in
a substantially similar economic position as they would have been had
the delay not occurred. In addition, Fitch does not deem the potential
deferral period as excessive.
A downgrade of KEXIM's IDR would automatically result in a downgrade of
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to
this rating action.
The publication of a RW&Es appendix is not required for this transaction.
Additional information is available at www.fitchratings.com.
Hai Jiao 1400 Limited
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14
Criteria for Rating Caps and Limitations in Global Structured Finance
Transactions (pub. 28 May 2014)
Global Rating Criteria for Single- and Multi-Name Credit-Linked Notes
(pub. 09 Mar 2015)
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
Dodd-Frank Rating Information Disclosure Form
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