S&P Pulls Down Rating Outlook for KDB
By Kim Jae-kyoung
Staff Reporter
Standard & Poor's has lowered its outlook on the credit rating of the Korea Development Bank (KDB), citing the upcoming privatization of the state-run lender.
The global credit rating agency said Wednesday that it had decided to downgrade the outlook on the lender's rating to ``negative'' from the current ``stable.''
The outlook downgrade means that there is high possibility of a rating reduction within the next 12 months.
The agency said the revision was based on the Korean government's announcement that KDB will be privatized.
``The negative outlook indicates the future reduction of government support. The ratings on the part of KDB that will be taken private will become more dependent on the bank's stand-alone credit strength,'' the agency said in a statement
``If the privatization plan accelerates or government support significantly changes, the ratings on the privatized entity will be lowered,'' it added.
The government currently owns KDB, and it guarantees the repayment of principal and interest on bonds issued by the bank.
The agency added that it will assess all future information relating to the privatization program, and take any necessary rating action
S&P's action came a week after Moody's Investor Services downgraded its outlook from ``stable'' to ``negative,'' for the same reason