Moody's Upgrades LG Electronics Credit Rating Outlook to 'Positive'

Outlook Revised for the First Time in Four Years Since 2021
Key Point: Improvement in LG Display's Creditworthiness

International credit rating agency Moody's announced on the 19th (local time) that it has maintained LG Electronics' issuer and unsecured senior bond credit rating at 'Baa2' while upgrading the credit rating outlook from 'stable' to 'positive.' This upgrade is analyzed to be mainly due to the improvement in the creditworthiness of LG Electronics' affiliate, LG Display.

Seoul Yeouido LG Twin Tower view. Photo by Kang Jin-hyung

The meaning of the 'positive' credit rating outlook is that, considering the company's business structure and financial situation, the credit rating is expected to have a high possibility of being upgraded in the future. This is the first time in four years since 2021 that Moody's has adjusted LG Electronics' credit rating and outlook. Moody's explained the reason for upgrading the credit rating outlook as follows: "Although uncertainties in the business environment have increased this year due to tariff hikes and weak demand for some products, the company is expected to manage its financial structure and maintain the soundness of financial indicators based on stable profit-generating capabilities."

In particular, the improvement in the financial condition of LG Display, in which LG Electronics holds a 36.72% stake, was cited as a positive factor that not only mitigates the possibility of contingent support for LG Display in the future but also allows expectations for improvements in equity-method earnings. Moody's also mentioned, "The ongoing initial public offering of the Indian subsidiary is another factor that can further strengthen financial indicators in the future." LG Electronics submitted preliminary listing documents to the Indian Securities and Exchange Board at the end of last year for listing its Indian subsidiary and selling a 15% stake.