Moody's "Korean Companies' Credit Ratings Expected to Recover Unevenly by Industry"

[Asia Economy Reporter Minji Lee] Although the global economic recovery is expected to support the creditworthiness of Korean companies, the refining and aviation sectors are projected to continue facing sluggish business conditions.

According to a report published by Moody's on the 8th, as the global economy recovers following the COVID-19 pandemic and profits improve, the credit metrics of Korean companies are expected to strengthen. However, the pace of recovery is anticipated to vary unevenly across industries depending on end-user demand and supply conditions.

Sean Huang, a Moody's analyst, stated, "Credit metrics are expected to improve for most Korean companies rated by Moody's," adding, "Large cash holdings by some companies will support their credit profiles or at least mitigate credit pressure caused by profit declines last year."

He further noted, "Certain industries such as refining and aviation will experience a relatively slower recovery due to ongoing travel restrictions in various countries and weak demand for transportation fuels."

Uncertainties in economic recovery, rising raw material prices, and the possibility of won appreciation are identified as factors that could deteriorate corporate credit conditions. For example, SK Hynix (Baa2, negative) is seeing profit improvements, but large-scale investments and increased borrowings could negatively impact its creditworthiness.

Among the 23 private Korean companies rated by Moody's, 16 have a 'stable' outlook, while 7 have a 'negative' outlook. Except for Korea District Heating Corporation (A1, positive), all other Korean public enterprises rated by Moody's have a 'stable' outlook.