As credit downgrades for domestic companies have decreased compared to last year, the creditworthiness of the battery and advanced materials sectors continues to decline. Instead of a broad increase in corporate credit risk, financial burdens are accumulating in certain industries where prolonged downturns are evident.
According to the credit rating industry on October 11, 29 companies have had their corporate bond and commercial paper (CP) credit ratings or outlooks downgraded this year, a decrease from 32 during the same period last year.
The number of downgrades by the three major credit rating agencies (Korea Ratings, Korea Credit Ratings, and NICE Investors Service) rose to 71 this year from 48 last year, an increase of 47.9%. However, 38 of these downgrades were concentrated in CJ Group affiliates. Excluding these, there were 33 downgrades this year, which is 31.3% lower than last year's total of 48.
CJ Group has seen a series of credit downgrades following the default of some affiliates and the filing for corporate rehabilitation in June. The downgrades of major affiliates such as JoongAng Ilbo, Contentree JoongAng, JTBC, and Megabox Central have significantly contributed to the overall increase in downgrades.
In contrast, the creditworthiness of individual sectors shows a notable decline among battery-related companies. SK IE Technology's credit rating dropped from A to A-, while SK Nexilis fell from A2 to A2-. Ecopro's A2 rating outlook was changed from stable to negative, and Daijin Advanced Materials was also placed under negative review.
The ongoing downturn in the battery industry is reflected in the creditworthiness of related companies. A decline in credit ratings could increase the cost burden in future corporate bond issuances and other external financing processes.
On the other hand, the petrochemical sector, which faced numerous downgrades last year, appears relatively stable. Last year, five companies, including Lotte Chemical, Hyosung Chemical, SK Advanced, SKC, and Huvis, saw their credit ratings downgraded, but this year only Lotte Chemical and Yeochun NCC have been affected.
However, some companies, such as Lotte Chemical and Ecopro, have seen their credit ratings decline again this year, indicating that even with a reduction in the number of downgrades across the sector, the financial burdens of individual companies have not been alleviated.
Ultimately, changes in corporate credit ratings this year can be categorized into significant credit events involving CJ Group and the ongoing deterioration of creditworthiness in certain manufacturing sectors. While the overall number of downgrades in the market has decreased, the financing burdens for companies experiencing delayed recovery in their business conditions are expected to remain a key variable for the foreseeable future.
* This article has been translated by AI.
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