Korea Ratings: "Industry-Specific Credit Differentiation Last Year... K-Shaped Polarization Expected Again This Year"

Korea Ratings announced on January 2 that last year, differences in corporate credit ratings by industry became increasingly pronounced. While the overall trend remained downward, the extent of downgrades eased compared to the previous year. The so-called K-shaped polarization, driven by industry-specific business conditions, is expected to continue this year as well.

Jung Seungjae, Head of the Credit Policy Division, stated in the '2025 Credit Rating Change Status' report released that day that corporate credit ratings last year showed clear differentiation by industry, with a slight predominance of downgrades.

Specifically, industries such as petrochemicals and construction faced credit rating downgrades due to sluggish market conditions and declining performance. The gaming and cinema sectors were affected by changing trends, while savings banks and real estate trusts saw downgrades due to unfavorable business environments and increased concerns over asset quality, which led to deteriorating results. In contrast, sectors such as power, defense, shipbuilding, semiconductors, and bio enjoyed favorable business conditions, robust performance, and strengthened capital capacity, resulting in improved credit ratings. Similarly, life insurers and large securities companies saw their credit ratings upgraded thanks to improvements in capital adequacy and capital size.

As a result, based on long-term ratings last year, 17 companies were upgraded and 22 were downgraded, indicating a slight predominance of downgrades. Among the 78 companies whose short- or long-term ratings or outlooks changed, 40 experienced downgrades and 38 upgrades, again showing a marginally downward trend. However, the pace of downgrades moderated. In 2024, a total of 69 companies saw changes, with 44 downgrades and 25 upgrades. Additionally, there were two defaults in long-term (speculative grade) ratings-MFM Korea and Korea Union Pharm-and one default in short-term ratings, which was Homeplus.

Jung emphasized, "With K-shaped polarization expected based on industry-specific business conditions, it is necessary to closely monitor both domestic and external variables such as global tariffs, geopolitical risks, the boom in artificial intelligence, exchange rates and interest rates, and the domestic economy."