Kia loses credit rating on planned deal

Standard and PoorÆs withdraws its rating on the Korean car company's proposed senior note transaction in a move confirming that Asia's credit markets are now closed for the year.
Standard and PoorÆs has withdrawn its BBB- rating on Kia MotorsÆ proposed 2012 senior unsecured notes following the companyÆs decision to postpone the offering due to deteriorating bond markets.

The company initially announced a $300 million deal in June, which it postponed as subprime fears began to grip investors. Kia Motors is just one of a number of Asian issuers that have pulled deals due to volatility in recent months. The latest casualty, Country GardenÆs $1.5 billion offering, failed to garner enough investor interest following the severe market downturn earlier this month.

A number of Korean banks and corporates, including Woori Bank, KDB, Hyundai Capital and SK Telecom, have also put their deals on hold, as have a number of Indian banks. These include: State Bank of India, which had mandated Barclays, Deutsche Bank, Citi and JPMorgan for an upcoming offering; and Bank of India.

Chinese real estate company AgileÆs $400 million deal, managed by HSBC, is still attempting to come to market, together with UTACÆs $1.1 billion bond led by ABN AMRO, JPMorgan and Merrill Lynch, but both transactions are unlikely to price before year-end, according to market specialists.

More negative news caused Asian bond spreads to widen again yesterday, following the announcement that HSBC provided up to $35 billion to support its two structured investment vehicles. This followed the news that Goldman Sachs downgraded CitiÆs shares on Monday to ôsellö due to potential write-downs of up to $15 billion in the next two quarters. The news sent CitiÆs shares down more than 5%.

Meanwhile, Asian investors had news of their own to contend with. Pakistan has endangered its credit outlook without any help from the global turmoil. Standard and PoorÆs has announced that internal strife is likely to jeopardise its positive credit fundamentals.

ôHow the countryÆs political transition unfolds over the next few months will give a strong indication on whether PakistanÆs ratings will remain supported by reforms, foreign investment and a prudent policy mix, or whether they will be eroded by continued instability or a regression into a highly politicised and ineffectual administrative environment under an elected government,ö states the report.
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