Local banks' outstanding exposure to DSME, including debt, securities and payment guarantees, is estimated at 21.7 trillion won by NH Investment & Securities. If the estimate of 2 trillion won in losses is accurate and is reflected in its books in the second quarter, DSME's debt-equity ratio could rise to 600 percent from the current 370 percent, an analyst said. "When Daewoo issued bonds worth 500 billion won in April 2014, it agreed to keep its debt ratio below 500 percent. A rise above that level will downgrade its credit rating," an Ebest Securities analyst said. To head off that possibility, KDB is reportedly preparing a four-pronged plan that would increase paid-in capital, swap debt for equity, supply fresh capital and extend the repayment period for outstanding loans. "A combination of the four will improve [Daewoo's] financial shape without a debt workout," a KDB official said.