Fewer Companies Saw Credit Rating Downgrades This Year, but Downgrades Rose 48%

JoongAng Group affiliates account for more than half of all downgrades
Petrochemical downgrades may be nearing an end

The number of domestic companies whose credit ratings were downgraded this year was slightly lower than last year. However, the number of downgrades recorded by credit rating agencies surged by nearly 50%. Rather than reflecting a broad-based deterioration in the market, the increase in the overall figures was driven largely by a major credit event: multiple key affiliates of JoongAng Group filing for corporate rehabilitation proceedings in succession.

A briefing on future plans, including filing a criminal complaint, by the joint legal team representing victims of Central Group bond investments is underway at the Lawyers’ Hall in Seocho-gu, Seoul. Yonhap News.

According to the credit rating industry on October 11, a total of 29 companies, excluding duplicates, had their corporate bond or commercial paper (CP) credit ratings or rating outlooks downgraded so far this year, down slightly from 32 in the same period last year. By contrast, the three domestic credit rating agencies—Korea Ratings·KR, Korea Investors Service, and NICE Ratings—recorded 71 downgrades this year, up 48% from 48 last year. This means that numerous cases involved a company's creditworthiness deteriorating enough to prompt simultaneous downgrades by multiple rating agencies, or successive downgrades over time.

The liquidity crisis at JoongAng Group is cited as the main reason for the sharp increase in downgrades. A total of 38 CP rating downgrades were recorded across six JoongAng Group affiliates: JoongAng Ilbo, JoongAng Ilbo S, Contentree JoongAng, JTBC, SLL JoongAng, and Megabox JoongAng. This accounted for 54.5% of all downgrades this year.

Excluding the JoongAng Group situation, credit weakness among manufacturing and electronics companies, including those in the secondary battery sector, stood out by industry. Kleannara, Daejin Advanced Materials, LOTTE ALUMINUM, Daedong, SK ie technology, SK Nexilis, and EcoPro were among the companies on the downgrade list. The delays in the recovery of conditions in related industries, amid factors such as slowing electric vehicle demand, are seen as having added to their financial burdens.

By contrast, downgrades in the petrochemical industry—which saw the ratings of five companies, including LOTTE Chemical, Hyosung Chemical, and SK Advanced, all cut last year—eased somewhat this year, with the number of affected companies falling to two: LOTTE Chemical and YeocheonNCC.

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