[Edaily Marketin, Reporter Lee Geon-eom] On the 13th, Korea Ratings (hereinafter "Korea Ratings") downgraded the credit ratings of four affiliates of the Joongang Group in a special review and placed them on "downgrade watch."

The four companies subject to this adjustment are SSL JoongAng Co., Ltd., JoongAng Ilbo Co., Ltd., Contentre JoongAng Co., Ltd., and Megabox JoongAng Co., Ltd. Specifically, the credit ratings for unsecured corporate bonds of SSL JoongAng and JoongAng Ilbo were downgraded to ‘BB’. The credit ratings for commercial paper and short-term bonds of SSL JoongAng, Contentre JoongAng, and Megabox JoongAng were lowered to ‘B’.

Han Shin Rating cited the excessive financial burden across the entire affiliate group and the expansion of liquidity risks as the key reasons for this downgrade. The assessment is that, as the JoongAng Group has formed a structure with very high financial interdependence through intercompany loans and credit facilities among major affiliates, the possibility of a liquidity crisis at some affiliates spreading to the entire group is becoming a reality.

Kwon Hyuk-min, a senior analyst at Han Shin Rating responsible for evaluating SSL Joongang, JoongAng Ilbo, and Contentre Joongang, stated, “The group’s overall access to capital markets has weakened due to a short-term debt maturity structure and an excessive debt burden relative to cash flow,” adding, “We also assess that efforts to raise funds using held assets are being delayed, and uncertainty regarding the management of maturing debt—including securitized securities issued by affiliates—has increased.”

Hanshin Rating also views the risk of contagion within the group as high. Senior Analyst Kwon assessed, “Given the high level of financial interdependence across the group, the potential for liquidity risk to spread among affiliates appears to have increased.” In the same vein, Chae Seon-young, a senior analyst at Hanshin Rating responsible for the evaluation of Megabox Joongang, also stated, “We judge that uncertainty regarding the management of debt maturities has increased.”

Han Shin Rating plans to closely monitor the group’s future handling of maturing debt and its ability to raise funds through asset securitization. Observers note that any further credit rating adjustments will depend on how the company manages this liquidity crisis.

Meanwhile, NICE Credit Rating downgraded JTBC’s unsecured bond credit rating from ‘BBB (Negative)’ to ‘CCC’ the previous day. It also lowered the ratings for commercial paper (CP) and electronic short-term bonds from ‘A3’ to ‘C.’ A ‘CCC’ rating indicates a speculative grade, implying a low certainty of principal and interest repayment and containing speculative elements. #Korea Ratings also downgraded JTBC’s credit rating to ‘BB’. It also lowered the credit ratings of JoongAng Ilbo and SLL JoongAng to ‘BB+’.