April 26, 2024

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[THE INVESTOR] South Korean credit ratings agencies may be too lenient in assessing local firms, data showed on Feb. 22.

According to the industry tracker CEO Score, local agencies gave far higher ratings to large South Korean entities than foreign agencies since 2014. CEO Score looked at the ratings of 51 private and public sector companies that were rated by both foreign and local agencies. 

The data showed that local agencies gave top two ratings to 44 of the 51 entities. The ratings are divided into 22 levels, from AAA to D.

In comparison, the highest rating given by foreign agencies was AA, the third best rating. Of the 51, 12 state-run companies received AA- or higher ratings, while those for the remainder fell below AA-, the fourth best rating.

Lotte Shopping had the largest disparity in ratings given by foreign and local agencies. The company was rated AA+ by all three local agencies – NICE Investor Service, Korea Investors Service and Korea Ratings – but were rated as BBB - by Moody’s Investors Service and Fitch Ratings. 

There are also nine companies whose foreign and local credit ratings differed by seven levels. The majority of the nine firms – SK hynix, SK Innovation, GS Caltex, S-Oil, E-mart, SK E&S, Samsung Securities, Hyundai Card and NH Investment & Securities – were rated AA+ by local agencies by BBB by foreign agencies.

By Choi He-suk (cheesuk@heraldcorp.com)