Credit rating agencies discreet about aviation deal

Domestic and global credit rating agencies are maintaining a cautious stance toward the possible impact of Korean Air owner Hanjin Group's plan to acquire Asiana Airlines on its subsidiaries as there still remain uncertainties over the proposed deal. Moody's Investors Service is considering upgrading the credit rating of Hanjin International, a wholly-owned Korean Air subsidiary which manages the Wilshire Grand Center building in Los Angeles. "The review for upgrade reflects our expectation that the proposed acquisition, if completed, will significantly improve Korean Air's scale and competitive position. Additionally, Korean Air's planned equity raising and increased importance to the Korean economy will substantially mitigate the risk associated with Asiana's poor liquidity and financial leverage," Moody's analyst Sean Hwang said. "The resultant improvement in Korean Air's credit quality would in turn benefit Hanjin International's credit quality, given the likelihood that Korean Air will provide financial support to Hanjin International when needed." The global agency expected Korean Air's market shares for international passenger business and cargo will grow 38 and 67%, respectively, from a year earlier, if the deal is successful. The nation's three largest agencies are also keeping a close eye on the progress of the deal.<br/>