Credit rating adjustment to put HEI`s financial burden

Hyundai Electronics Industries (HEI) will have to bear an additional burden of interest payments on corporate bonds to be acquired by Korea Development Bank (KDB) after Korea Information Service lowered its credit rating from the present BBB- to BB+.

Creditors of HEI, including KDB, said Monday that they would soon hold negotiations with HEI and reset the basic interest rate on the electronics maker`s corporate bonds based on the lowered credit rating.

They will start with 100 billion worth of bonds that come due at the end of this month. However, they said that already acquired bonds would be subject to the previous rating of BBB-.

As the difference in earning ratio between the two credit ratings reaches some 1.86 percent, the financial burden on HEI is expected to increase when the interest rate is adjusted.

Meanwhile, KDB plans to take over 100 billion won worth of HEI`s corporate bonds on Jan. 30 and 300 billion won next month.

Park Hyeon-Jin witness@donga.com