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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] SEOUL, November 17 — Global rating agency Moody’s has downgraded the credit ratings of LG Chem and its subsidiary LG Energy Solution (LGES) by one notch each, raising concerns across Korea’s chemical and secondary battery industries ahead of domestic year-end credit reviews.
Moody’s lowered LG Chem’s rating from Baa1 to Baa2, marking its second downgrade in less than a year, and assigned the same Baa2 rating to LGES. Baa2 corresponds to BBB under S&P and Fitch scales.
The downgrade reflects rising debt from large-scale battery capacity expansions and weakening profitability due to oversupply in petrochemicals and EV batteries, Moody’s said. It expects LG Chem’s adjusted net debt-to-EBITDA ratio to increase from 3.3x last year to 3.4–3.7x this year and next, though the outlook remains stable.
LG Chem owns 79.4% of LGES, and Moody’s emphasized that the two companies’ credit profiles are closely linked, basing its analysis primarily on LG Chem’s consolidated financials.
Domestic rating agencies may also face pressure to follow suit. LG Chem maintains an AA+ domestic rating with a negative outlook, leaving open the possibility of further downgrades absent an industry rebound. With many chemical-sector companies already on negative watch, broader credit deterioration across the sector is possible.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
