Fitch: rates IBK notes

Fitch Ratings said it assigned Industrial Bank of Korea's planned lower tier 2 subordinated notes an expected rating of A. The issue size is expected to be $200 million.

Fitch's rating is not based on the bank's stand-alone financial strength but on its relationship with the Korean government. IBK is one of the three policy banks implicitly guaranteed by the Korean government.

Given that the government is legally obliged to maintain the bank's solvency, the possibility of a liquidation resulting in higher losses for subordinated than for senior creditors appears remote, therefore Fitch rates the bank's subordinated debt at the same level as its senior debt.

Fitch noted that its ratings may change if there is any change to these support arrangements under the IBK Act.

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