...IDRs Aligned with Sovereign's: The Issuer Default Ratings (IDRs) of The Export-Import Bank of Korea (Korea Eximbank) (KEXIM) are equalised with South Korea's ratings (AA-/Stable), reflecting an extremely high likelihood of state support, if needed. The bank provides long-term policy credits for exports and imports, and is effectively 100% owned by the state (66% directly and the rest through Korea Development Bank (AA-/Stable) and Bank of Korea). Moreover, the state is obliged to absorb any losses that are not covered by the bank's reserves. Thin Reserve: KEXIM's reserve (retained earnings plus capital surplus) ¡ a buffer in its standalone balance sheet for absorbing losses before the de facto guarantee kicks in ¡ has been whittled down to KRW0.5 trillion as the bank reported a KRW1.5 trillion net loss in 2016 after a loan loss on its substantial exposure to Daewoo Shipbuilding & Marine Engineering Co., Ltd (DSME). Fitch Ratings does not expect the reserve to be wiped out in the near term,...
