Moody's upgrades Amkor notes to B1

Moody's Investors Service said it upgraded Amkor Technology, Inc.'s senior unsecured notes to B1 (LGD3, 40%) from B2 (LGD3, 48%) and affirmed the corporate family and probability-of-default ratings at B2, $22 million 10½% senior subordinated notes due 2009 at Caa1 (LGD5, 81%), $190 million 2.5% convertible senior subordinated notes due 2011 at Caa1 (LGD5, 89%) and speculative grade liquidity rating at SGL-2.

The outlook is stable.

The company refinanced its $300 million guaranteed senior secured second-lien term loan due 2010 with a new $300 million secured term loan maturing 2014 issued by Amkor Technology Korea, Amkor's South Korean subsidiary. The agency said the one-notch upgrade of the senior notes reflects a lower loss-given-default estimate (40% from 48%) due to effectively less secured debt in the capital structure despite the legal name of the new obligation, as Moody's believes the collateral value of the new debt has minimal value, if any, in a distressed scenario (i.e., 100% deficiency claim).

Moody's said it views constructively the maturity extension as well as the new loan's improved pricing, which should result in annual interest expense savings of roughly $10 million.

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