Companies with Improved Credit Ratings Outnumbered the Opposite Last Year

The Financial Supervisory Service announced on April 30 that 44 South Korean companies saw tjeor their credit ratings improve last year, while 37 firms suffered a rating downgrade. The numbers had been 24 and 45 in 2017.

The former exceeded the latter for the first time in six years last year. The Financial Supervisory Service explained that the data does not mean any overall improvement of the national economy in that the data is limited to companies issuing unsecured bonds.

Last year, NICE Investors Service, Korea Ratings and Korea Investors Service accounted for 33.9 percent, 33.1 percent and 32 percent of the domestic credit rating market, respectively. A total of 1,094 companies had unsecured bond credit ratings, seven less than in the previous year.

No unsecured bond issuer went under last year. As a result, the annual default rate fell from 0.18 percent to 0 percent. When it comes to the average default rate for the period of 1998 to 2018, the credit and default data showed a close correlation with a significant difference found between the investment (0.14 to 1.59 percent) and speculative (6.32 to 13.6 percent) grades.

As of the end of last year, a total of 111 companies had non-stable credit ratings outlooks, including 62 with negative and 48 with positive. The ratio of the former fell from 75 percent to 61 percent in 2017 and then to 55.9 percent in 2018.