Fitch Affirms Seven and Seven Ltd; Outlook Stable

NEW YORK--()--Fitch Ratings has affirmed Seven and Seven Ltd. as follows:

--$125,250,000 floating-rate guaranteed notes due 2019 at 'AA-sf'/Outlook Stable.

At closing, the note proceeds were used to fund a portion of a loan 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; Issuer Default Rating [IDR] 'AA-'/Outlook Stable/'F1+'), and certain other financial institutions. The loan was 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 notes are to receive 10 installments, three of which have already been paid, of interest and principal in equal amounts over five years. Noteholders will also receive make-whole or 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.

The indenture trustee, Wells Fargo Bank, N.A. (IDR 'AA'/Outlook Stable/'F1+') and KEXIM entered into a guarantee agreement at closing, whereby KEXIM guaranteed 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 premium 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 IDR as guarantor. Fitch has not formed a credit opinion on the underlying borrowers or primary guarantor.

As described in Fitch's "Global Rating Criteria for Single- and Multi-Name Credit-Linked Notes," dated Feb. 8, 2016, if the guarantor can only disburse funds after an event of default has been triggered on the CLN, Fitch will expect the SPV to receive the deferred funds in a reasonable amount of time as determined by a rating committee. 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 deems the potential delay of 14 business days as reasonable. Interest on the notes will accrue during the delay period.

RATING SENSITIVITIES

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

DUE DILIGENCE USAGE

No third-party due diligence was provided or reviewed in relation to this rating action.

Additional information is available at www.fitchratings.com.

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. 16 Jun 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882401

Global Rating Criteria for Single- and Multi-Name Credit-Linked Notes (pub. 08 Mar 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878513

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=883130

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1008914

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1008914

Endorsement Policy

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

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Contacts

Fitch Ratings
Primary Analyst
Shashi Srikantan
Director
+1-212-908-0393
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-9171
or
Media Relations
Sandro Scenga
+1-212-908-0278
New York
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Shashi Srikantan
Director
+1-212-908-0393
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-9171
or
Media Relations
Sandro Scenga
+1-212-908-0278
New York
sandro.scenga@fitchratings.com