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[Alpha Biz=(Chicago) Reporter Kim Jisun] According to the investment banking (IB) industry on the 21st, domestic credit rating agencies have lowered the credit ratings of Lotte's major affiliates. Korea Credit Rating and Nice Credit Rating lowered Lotte Chemical's credit rating from AA + (negative) to AA (stable).
The petrochemical industry continues to suffer a slump and the excessive burden of borrowing is a major factor in Lotte Chemical's creditworthiness decline. According to NICE Investors Service, Lotte Chemical's sequential deposit amounted to 3.3 trillion won as of the end of March, up more than 4 trillion won from the end of 2021.
Other affiliates also saw their creditworthiness fall as risk signals turned on for Lotte Chemical, the group's key "cash cow." Usually, credit rating agencies reflect the possibility of supporting key affiliates when rating credit ratings by company. In the case of Lotte Group, Lotte Chemical accounts for a large portion of the group's integrated creditworthiness as it is a key affiliate that accounts for 34% of the group's sales.
According to NICE Investors Service, Lotte Holdings, which has Lotte Chemical as its subsidiary, saw its credit rating drop from AA to AA- (stable) on the 20th. Lotte Holdings is a pure holding company that does not do business. Lotte Rental and Lotte Capital also saw their creditworthiness downgraded from "AA-" to "A +" and from "AA-" to "A + (stable)," respectively, reflecting the reduced possibility of supporting the group in case of emergency.
AlphaBIZ 김지선(stockmk2020@alphabiz.co.kr)
