Fitch to Rate Guaranteed Notes Issued by Seven and Seven Ltd.; Issues Presale

NEW YORK--()--Fitch Ratings expects to assign the following rating to USD125.250 million guaranteed notes due September 2019 issued by Seven and Seven Ltd.:

--'AA-sf'; Outlook Stable.

The note proceeds will be used to fund a portion of loans made to a group of 18 borrowers under a loan agreement with Scorpio Tankers, Inc., as guarantor of the loan, the issuer, the Export-Import Bank of Korea (KEXIM; IDR 'AA-'/Outlook Stable/'F1+'), and certain other financial institutions. The loan will be used to fund a portion of the purchase price of 18 shipping vessels. The borrowers will make regular payments under the loan agreement according to a predefined schedule. The loan payments will in part be used to meet the scheduled interest and principal due under the notes.

The indenture trustee, Wells Fargo Bank, N. A. (IDR 'AA-'/Outlook Stable/'F1+') and KEXIM will enter into a guarantee agreement whereby KEXIM guarantees, in favor of the indenture trustee, principal, accrued and unpaid interest due on the due date plus interest to accrue from the due date up to the date of its actual payment, and any make whole amount or prepayment premium as applicable. The make whole amount or prepayment premiums will be paid if KEXIM opts to accelerate its payment of the outstanding principal amount of the notes.

KEY RATING DRIVERS

The rating on the notes is credit-linked to KEXIM's long-term Issuer Default Rating (IDR) as guarantor. Fitch has not formed a credit opinion on the underlying borrowers or primary guarantor.

The terms of the KEXIM guarantee allow 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. However, Fitch believes that, in this case, the terms of the guarantee leave the noteholders in a substantially similar economic position as if a delay had not occurred and does not deem the potential maximum deferral period of 14 business days as excessive. Interest on the notes will accrue during the delay period.

Wells Fargo Bank, N.A., as an indenture trustee is responsible for maintaining the payment account and distributing payments on each payment date, among other duties. Given the scope of its responsibilities, Fitch considers Wells Fargo Bank, N.A. a direct support counterparty. Wells Fargo Bank, N.A. meets Fitch counterparty criteria, based on its IDR and established track record as a trustee for securitized products.

RATING SENSITIVITIES

A downgrade of KEXIM's long-term IDR would automatically result in the downgrade of the notes.

The notes will receive semi-annual payments of interest and principal in equal installments over five years. Note holders will also receive make-whole and prepayment premium payments in case of an early redemption, as further described in the presale report. The rating addresses the likelihood of all contractual payments being received as per the terms of the transaction.

More details are available in the presale report, available at www.fitchratings.com.

Additional information is available at www.fitchratings.com.

Sources of information: Transaction documentation

Applicable Criteria and Research Related:

--'Global Rating Criteria for Single- and Multi-Name Credit-Linked Notes,' dated February 2014;

--'Global Structured Finance Rating Criteria,' dated May 2014;

--'Criteria for Rating Caps and Limitations in Global Structured Finance Transactions,' dated May 2014.

Applicable Criteria and Related Research: Seven and Seven Ltd. (US Structured Credit)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=751961

Global Rating Criteria for Single- and Multi-Name Credit-Linked Notes

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=729785

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=838611

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Contacts

Fitch Ratings
Primary Analyst
Helen Anagnostos
Director
+1-212-908-0876
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Alina Pak, CFA
Senior Director
+1-312-368-3184
or
Committee Chairperson
Derek Miller
Senior Director
+1-312-368-2076
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Helen Anagnostos
Director
+1-212-908-0876
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Alina Pak, CFA
Senior Director
+1-312-368-3184
or
Committee Chairperson
Derek Miller
Senior Director
+1-312-368-2076
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com