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Moody's reviews 6 Korean brokerage houses' ratings for downgrade

All News 10:41 April 08, 2020

SEOUL, April 8 (Yonhap) -- Moody's Investors Service said Wednesday that it is reviewing six South Korean securities firms for a credit downgrade, citing the coronavirus-incurred volatility in the financial markets.

The six securities firms under the creditor's review include KB Securities Co. (A3), Korea Investment & Securities Co. (Baa2), Mirae Asset Daewoo Co. (Baa2), NH Investment & Securities Co. (Baa1), Samsung Securities Co. (Baa2) and Shinhan Investment Corp. (A3).

Moody's reviews 6 Korean brokerage houses' ratings for downgrade - 1

Moody's expected that a sharp correction in global and domestic asset prices will significantly weaken their profitability, capital adequacy, funding and liquidity in the face of the COVID-19 pandemic.

South Korean securities markets are "vulnerable through their trades related to structured notes, short-term financing business and contingent liabilities, as well as through their accumulation of overseas assets and real estate assets," Moody's said.

As of the end of February, the South Korean financial industry held 105 trillion won (US$86 billion) worth of structured notes outstanding. Moody's said such a "very high balance of structured notes" is likely to pose multiple near-term challenges, such as higher liquidity requirements, losses in hedge trades and misselling claims.


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