NICE Credit Rating: "Hanyang Securities' Exposure to JoongAng Group at 84 Billion Won... Credit Rating to Be Monitored"

"Hanyang Securities' Exposure Reaches 13% of Equity

Collateral in Place Partially Mitigates Negative Credit Impact"

NICE Credit Rating has reviewed the credit exposure of financial institutions to JoongAng Group, which has filed for rehabilitation proceedings, and found that Hanyang Securities has the highest level of exposure.

On June 16, NICE Credit Rating released a report titled "Review of Exposure by Financial Sector Related to JoongAng Ilbo Group," disclosing these findings.

Jungang Ilbo Group-related Hanyang Securities Holdings Exposure. NICE Credit Rating

According to the report, as of June 15, the total credit exposure of financial institutions to five companies that have filed for rehabilitation proceedings—JoongAng Holdings, JoongAng P&I, Megabox JoongAng, Contentree JoongAng, and JTBC—amounts to approximately 800 billion won. The total credit exposure to the major eight companies, including JoongAng Ilbo, SLL JoongAng, and JoongAng Ilbo M&P, is about 1.3 trillion won.

In particular, the review examined whether the exposure of individual companies in the banking, securities, and credit finance sectors exceeded 0.5% of their total assets or 2.0% of their capital. Only Hanyang Securities met this threshold. NICE Credit Rating stated, "While some other financial institutions may face limited potential losses, the exposure size is not large compared to their total assets and capital, so the impact on their financial stability is considered limited."

For Hanyang Securities, the book exposure related to JoongAng Ilbo affiliates is approximately 84 billion won. By company, this consists of 54 billion won for JTBC and 30 billion won for JoongAng Ilbo. Considering that Hanyang Securities has shareholders' equity of around 647.8 billion won, NICE Credit Rating assessed that the exposure to JoongAng Ilbo Group represents about 13% of its equity, indicating a quantitative burden.

However, NICE Credit Rating added that collateral has been set for this exposure at Hanyang Securities. The agency stated, "The collateral assets are managed under a trust structure, and approval for transfer collateral has been obtained from the main counterparty," adding, "The existence of these collateral assets helps support the recoverability of debts related to JTBC and JoongAng Ilbo and is considered a factor that partially mitigates the negative impact of related exposures on Hanyang Securities' credit rating."

Regarding JTBC, Hanyang Securities holds a first-priority right to proceeds from accounts receivable arising from broadcast program supply contracts signed among major domestic pay TV operators. As additional security, a secondary right to proceeds has been established for the security deposit of approximately 77 billion won on the JTBC headquarters building lease, and a pledge has also been placed on JTBC's shares in SLL JoongAng, according to NICE Credit Rating.

For commercial paper related to JoongAng Ilbo, collateral has been set with deposit return claims and payment claims of Townboard JoongAng, which is a 100% subsidiary of JoongAng Ilbo. In addition, a pledge has been placed on the 14th convertible bond of Kakao owned by JoongAng Ilbo and on 80% of Townboard JoongAng's shares.

NICE Credit Rating announced that, considering these collateral assets and the trust structure, it will focus on monitoring the cash generation capacity of the collateral and the level of recoverability of the related claims in relation to Hanyang Securities' future creditworthiness. The agency added, "If the recovery of bonds due is significantly delayed compared to expectations, if the cash generation capacity of the collateral assets deteriorates, or if additional large-scale non-performing loans are identified, causing a substantial increase in actual losses, this could adversely affect Hanyang Securities' business stability or loss-absorbing capacity and, consequently, its credit rating."

The previous day, five companies—JTBC, JoongAng Holdings, JoongAng P&I, Megabox JoongAng, and Contentree JoongAng—filed for rehabilitation proceedings with the Seoul Bankruptcy Court. JTBC's inability to repay a securitized loan of approximately 20 billion won on June 12 led to this development.

As a result, Korea Ratings·KR downgraded the long- and short-term credit ratings of JTBC, Contentree JoongAng, and Megabox JoongAng from C to D the previous day. NICE Credit Rating also lowered JTBC's unsecured bond rating from CCC to D, and its commercial paper and electronic short-term note ratings from C to D.

JoongAng Ilbo's credit rating was also downgraded. Korea Ratings·KR downgraded JoongAng Ilbo's unsecured bond rating from BB+ to B- and placed it under negative review. The ratings for commercial paper and electronic short-term notes were lowered from B+ to C.

This content was produced with the assistance of AI translation services.