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Number of corporate credit rating downgrades hits 3-year high: data

All News 11:35 December 23, 2019

SEOUL, Dec. 23 (Yonhap) -- South Korean companies suffered the most credit rating downgrades in three years this year, as lingering uncertainties from the Sino-American trade war have weighed heavily on their performances, industry sources said Monday.

Since January, a total of 55 firms have faced credit rating downgrades in separate evaluations by three major credit appraisers here, compared with 37 firms from a year ago. The credit rating agencies also eliminated 35 firms from their credit rating lists.

The numbers marked the highest number of rating cuts since 2016, when 91 firms suffered a decline in their rating grades.

"The downgrade was conducted mainly on the aggregated global supply and demand, as well as sagging domestic demand, increased competition and narrowed profit margins," rating company NICE Investors Service Inc. said.

Number of corporate credit rating downgrades hits 3-year high: data - 1

NICE Investors Service lowered ratings for 19 firms over the cited period, up from last year's 13 companies.

Korea Ratings Corp. cut credit ratings for 22 firms, compared with last year's 17. Korea Investors Service Inc. (KIS) revised down ratings for 14 firms, also up from 7 a year ago.

Among the largest exporters, Hyundai Motor Co., South Korea's largest automaker, was marked down a notch from "AAA" to "AA+" by all three ratings firms. Hyundai's sister company Kia Motors Corp. also suffered a credit rating downgrade from "AA+" to "AA."

Doosan Heavy Industries & Construction Co., the world's leading desalination plant builder, and LG Display Co., a major flat panel maker, also saw their credit ratings fall by a notch.

Their credit rating downgrades came as South Korea's exports have suffered a continued slump since November last year.

According to the trade ministry data, the country's outbound shipments in November slipped 14.3 percent from a year earlier to extend their slump to a 12th consecutive month.

Late last week, the central bank estimated the South Korean economy will grow 2 percent on-year in 2019 and 2.3 percent next year. The figures mark downward revisions from the 2.2 percent for 2019 and 2.5 percent for 2020 forecast in July.


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