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| Photo = Yonhap news |
[Alpha Biz= Reporter Kim Sangjin] The downward trend in corporate credit ratings observed this year is expected to continue into next year, with several sectors, including petrochemicals and savings banks, facing heightened risks of downgrades.
According to NICE Credit Rating on the 19th, 17 companies have experienced credit rating downgrades this year, outpacing the 11 that saw upgrades. Sectors such as petrochemicals and construction have been particularly affected, with companies like Hanwha TotalEnergies and SK PIC Global seeing downgrades. Similarly, GS Engineering & Construction and Taewang E&C in construction and savings banks like OSB Savings Bank and Pepper Savings Bank also faced lowered ratings.
Many companies in these sectors have a "negative" outlook, indicating a potential downgrade within months if performance or financial health does not improve. A downgraded credit rating could lead to decreased bond prices, increasing challenges for companies to secure funding. Those with non-investment-grade ratings may shift to private bonds or commercial paper (CP) to meet financing needs.
The petrochemical sector, in particular, is grappling with global market changes and oversupply from China, which has significantly expanded its production capacity for basic petrochemical products like ethylene in recent years. This has led to an oversupply in the Asian market, compounded by weakening global demand amid economic slowdowns, further deteriorating export conditions for South Korean petrochemical firms.
The ongoing struggles highlight the need for companies in these sectors to address structural challenges and adapt to changing market dynamics to prevent further credit deterioration.
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
