Hana Bank's ringgit notes get 'A'

Standard & Poor's Ratings Services had assigned its 'A' long-term issue ratings to the Malaysian ringgit senior unsecured notes issued by Hana Bank. Hana Bank issued MYR710 million of notes or US$210 million with a maturity date of 30 December 2011, and MYR290 million or US$85.8 million of notes with a maturity date of 29 June 2012. The Republic of Korea guarantees these notes, which Hana Bank drew down under its MYR1 billion or US$296 million medium-term note program.

The ratings on Hana Bank's MYR senior unsecured notes are equalised with the foreign currency rating on the Republic of Korea, which reflects the view of Standard & Poor's that the guarantee scheme is irrevocable, unconditional, and timely, and therefore qualifies for rating substitution treatment under the ratings criteria. In the event of a default by the issuer, the guarantee provides that the guarantor shall, upon written demand by the note holders, effect payments to an account specified by the note holders.

Standard & Poor's understands that although an approval from the president of the Republic of Korea and National Council is required for a guarantee payment, Standard & Poor's believes that approval procedures should not result in delayed payment and does not reflect an unwillingness to make timely payment on the part of the Korean government. It also understands that the government may still make a payment prior to any relevant approval being obtained where there are special circumstances that require an immediate guarantee payment. Furthermore, the National Council meets weekly, but may also hold ad-hoc meetings, which means that the approval procedure could take place on the same day as the required payment.