Corporate Credit Ratings Likely To Deteriorate
Moody’s has forecast that the number of negative adjustments of South Korean companies’ credit ratings is likely to exceed the number of positive adjustments for the upcoming year.
“Most of the 27 non-financial South Korean companies that we evaluate posted sales and operating profits adversely affecting their credit ratings in the first half of this year,” the international credit rating agency said on Sept. 10, adding, “Specifically, the first-half sales and profits are negative for 19, positive for five, and neutral for three.” It also said that a large number of South Korean industries deteriorated in the first half and the deterioration was conspicuous in the memory chip, oil refining and petrochemical industries in particular.
“When it comes to the 24 non-financial private companies we evaluate, we are maintaining a negative rating outlook or considering a downward adjustment for 13 and none of them is showing a positive outlook,” it continued to say, adding, “South Korean companies’ credit ratings are likely be additionally lowered in view of the U.S.-China trade war, the ongoing global economic recession, some companies’ large-scale investment plans, etc.”
The agency mentioned that the trade war would continue to adversely affect the performance of export-driven companies unlike Japan’s export curbs. “The export restrictions are nothing but delayed administrative procedures and, as such, are likely to have a limited impact on South Korean companies’ performance,” it explained.