HYBE Receives Its First A+ Credit Rating, Secures Solid Market Position

Korea Ratings and NICE Investors Service Assessments

HYBE has been assigned a corporate credit rating of A+ by credit rating agencies.

On September 11, Korea Ratings and, the previous day, NICE Investors Service, assigned HYBE a corporate credit rating of A+ with a “Stable” outlook.

NICE Investors Service stated in its report, “HYBE overwhelmingly surpasses domestic competitors in terms of revenue scale and holds a solid market position, with its album sales market share exceeding the mid-30% range. The domestic and international recognition and brand influence of its artists, such as BTS and Seventeen, are also outstanding.”

The report further noted, “Although the music management business is highly volatile due to the short career span of idol-centered artists and reputation management risks, HYBE is expanding its artist portfolio through a multi-label system, resulting in greater diversification compared to its competitors.”

Korea Ratings also commented, “While HYBE was previously highly dependent on BTS for revenue, it has reduced its reliance on specific artists and sought mid- to long-term growth by acquiring other labels and expanding its portfolio.”

Yonhap News Agency

HYBE’s financial stability also received positive evaluations. NICE Investors Service stated, “HYBE has maintained a virtually debt-free structure through capital inflows from its 2020 initial public offering and subsequent paid-in capital increases, as well as the generation of its own surplus cash flow. Notably, by selling all of its shares in SM Entertainment in May this year, HYBE’s net cash balance at the end of the first half of the year increased significantly from 9.83 billion won at the end of last year to 35.61 billion won.”

However, the agencies pointed out that, due to the nature of the industry, performance volatility remains a weakness. NICE Investors Service stated, “There will likely be continued incentives for investment to further diversify the artist portfolio, expand overseas business, and create additional revenue streams based on artist intellectual property, such as games. Therefore, we cannot rule out the possibility of increased financial burden from large-scale mergers and acquisitions in the future.” Korea Ratings also noted, “Although all BTS members completed their mandatory military service by the first half of this year and related revenue has increased again, profitability could decline due to changes in contract structures during renewals, and NewJeans’ activities are currently suspended. Initial overseas investment costs in regions such as the United States and Latin America, as well as expenses related to the debut of new artists, are also contributing to weakened profitability.”