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[Alpha Biz= Kim Jisun] On Friday (local time), international credit rating agency Moody’s downgraded SK Innovation’s credit rating from the investment-grade ‘Baa3’ to the non-investment-grade ‘Ba1.’ On the same day, Moody’s also withdrew the existing Baa3 rating for SK Geocentric, a chemical subsidiary of SK Innovation, and assigned it a corporate credit rating of Ba1. Additionally, Moody’s downgraded the bond rating of SK Battery America, the U.S. subsidiary of SK On, which is guaranteed by SK Innovation.


Moody’s stated, “The downgrade of SK Innovation’s rating reflects the expectation that its high debt burden will persist over the next one to two years,” citing “the continued underperformance of the battery segment and the heavy debt load” as key reasons. Regarding the decision to maintain a ‘negative’ outlook for SK Innovation and its subsidiaries, Moody’s explained that it reflects “uncertainty over whether SK Innovation can improve the profitability of its battery business and implement sufficient debt reduction measures.”


SK Innovation’s total debt increased by KRW 19.8451 trillion last year, reaching KRW 70.6606 trillion by the end of the year. Although the merger of SK Innovation and SK E&S in November last year initially led to positive expectations for financial structure improvement, the continued poor performance of battery subsidiary SK On ultimately resulted in a credit rating downgrade.

 

 

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