Fitch to Rate Secured Notes Issued by Hai Jiao 1400 Limited; Issues Presale

NEW YORK--()--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 Stable.

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 whole payment.

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.

RATING SENSITIVITIES

A downgrade of KEXIM's IDR would automatically result in a downgrade of the notes.

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

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=877286

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)

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

Global Rating Criteria for Single- and Multi-Name Credit-Linked Notes (pub. 09 Mar 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863276

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=998814

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=998814

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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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
Shashi Srikantan
Director
+1-212-908-0393
or
Committee Chairperson
Kevin Corrigan
Senior Director
+1-212-908-0156
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

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
Shashi Srikantan
Director
+1-212-908-0393
or
Committee Chairperson
Kevin Corrigan
Senior Director
+1-212-908-0156
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com