Short Term Vs. Long Term
Global credit rating agencies such as S&P, Fitch and Moody’s recently maintained their respective credit ratings for Samsung Electronics at AA-, A+ and A1 in view of the current semiconductor super cycle and its mobile division faring well these days. Still, they forecast that the company cannot but be affected by vice chairman Lee Jae-yong’s imprisonment and repeated trials in the long term.
Moody’s mentioned two factors as those affecting its credit rating for Samsung Electronics. One is the company’s market presence in each of the business fields it is engaged in and the other one is whether the company can maintain its stability and profitability with the trials going on.
“The absence of the vice chairman can have a negative effect on Samsung Electronics’ business activities in the long term,” S&P commented, adding, “Then, the brand image of Samsung Electronics will be negatively affected and important decisions to make such as those related to M&A can require more time.”
Fitch also mentioned the leadership risk and the likelihood of it leading to delays in investment and partnership formation. “In the short term, however, the leadership risk is likely to have a limited impact at best on Samsung Electronics’ credit rating and business performance because professional organizations are individually running its business units and its current domestic sales and financial conditions are very favorable,” it said.