Credit Rating A Hyosung Chemical Faces Crushing Defeat in Corporate Bond Demand Forecast

KDB Industrial Bank's 70 Billion KRW Acquisition Shows No Unsold Shares on Surface
Operating Losses Since Last Year, Debt Ratio Rises Due to Vietnam Factory

[Asia Economy Reporter Hwang Yoon-joo] Hyosung Chemical, rated 'A', suffered a crushing defeat on the 17th by recording virtually no sales in its corporate bond demand forecast.

According to the investment banking (IB) industry on the 17th, Hyosung Chemical's corporate bond demand forecast for 120 billion KRW resulted in no sales except for the full underwriting portion by the Korea Development Bank. On that day, demand forecasts were conducted for 70 billion KRW of 1.5-year bonds and 50 billion KRW of 2-year bonds, but there were no orders from institutional investors.

The Korea Development Bank fully underwrote 35 billion KRW each for the 1.5-year and 2-year bonds, totaling 70 billion KRW. The remaining 50 billion KRW became an undersubscription. The lead managers, KB Securities and Korea Investment & Securities, will take on the remaining amount.

The main reason for Hyosung Chemical's failure in the demand forecast is largely due to its performance. Last year, raw material prices rose due to the Ukraine war, and demand sharply declined due to China's zero-COVID policy, resulting in operating losses since last year.

The Vietnam factory is also a burden. After establishing a chemical plant in Vietnam, the debt ratio surged from 232.8% at the end of 2020 to 1395.1% in the third quarter of 2022. Because of this, Hyosung Chemical's credit rating is 'A (negative)', but the effective credit rating perceived by the market is 'A-'.