Hanshin Rating, SK Securities Corporate Commercial Paper and Short-Term Bonds Credit Rating Downgraded to 'A2'

Korea Credit Rating (KCR) downgraded SK Securities' commercial paper and short-term bond credit ratings from 'A2+' to 'A2' on the 7th. The downgrade was attributed to factors such as stagnant capital size and slow business growth leading to weakened market position, profitability decline due to real estate finance provisions, and inherent financial volatility caused by long-term investments and subsidiaries like MS Savings Bank.

Researchers Kim Ye-il and Wi Ji-won diagnosed, "While competitors have expanded market dominance and financial capacity through active capital increases, SK Securities has a small accumulated profit scale and slow capital size and business growth due to continuous dividends."

They also pointed out, "Since the second half of 2023, there has been a significant deterioration in the soundness of real estate finance. Although provisions of 44.4 billion KRW were set, the possibility of liquidation of Bridge Lot, whose business viability has declined, has increased, and the pre-sale type main PF (project financing) with poor sales performance has a high proportion of mezzanine and subordinate positions."

They added, "In the short term, we plan to monitor the additional provision burden and financial impact resulting from recent measures to restructure the real estate PF market. In the medium to long term, we will monitor the recovery of market position in key business sectors, structural improvement of profitability, exposure to real estate finance and long-term investment assets, and the level of capital adequacy and liquidity management due to support burdens for MS Savings Bank."