S-OIL has come under mounting pressure as 1.1 trillion won of corporate bonds are due to expire in 2020 and 2021. The corporate bond market has contracted due to the spread of the novel coronavirus, so the company is expected to have trouble issuing new bonds for refunding.
S-OIL needs to refinance 360 billion won worth of bonds falling due in the second half of 2020 and 740 billion won in 2021. The company issued new bonds in March to repay 130 billion won worth of bonds coming due this year, but needs to draw up a refinancing plan for the remaining 230 billion won.
S-OIL issued corporate bonds on a large scale in the process of constructing a complex petrochemical facility worth five trillion won. For this reason, 2.63 trillion won worth of bonds will mature by 2025.
S-OIL needs to secure additional funding as it is planning to promote a second-phase petrochemical project that will cost 7 trillion won by 2024.
The problem is that the corporate bond market has been frozen and the outlook for the refining industry is gloomy. Still, in the first quarter, there was demand for corporate bonds from blue-chip companies, but the situation changed in April.
A slump in the oil refining industry has dragged down S-OIL’s credit rating, amplifying the refinancing pressure on the company. Global credit rating agency Standard & Poor's (S&P) recently lowered its outlook on S-OIL’s credit rating from “Stable” to “Negative.”