[Edaily Marketin Reporter KIM YEON-SEO ] Warnings are emerging that the balance is shifting toward downgrades for corporate credit ratings in the second half of this year. Although the first-half regular assessments by credit rating agencies showed that domestic corporate credit ratings returned to an “upgrade-dominated” trend—with more upgrades than downgrades for the first time in about three years—the proportion of “negative” outlooks, which indicate the future direction of ratings, has increased.

According to the credit rating industry on the 9th, an analysis of the credit rating outlooks following the first-half regular reviews by the three major domestic credit rating agencies—Korea Corporate Rating, Korea Credit Rating, and NICE Credit Rating—showed 60 “positive” outlooks and 76 “negative” outlooks. The P/N ratio, calculated by dividing the number of positive outlooks by the number of negative outlooks, stood at 0.79.

A P/N ratio above 1 indicates that there are more companies likely to see their credit ratings upgraded in the future, while a ratio below 1 suggests there are more companies likely to see their ratings downgraded. As of the end of last year, the three credit rating agencies had 78 positive outlooks and 88 negative outlooks, resulting in a P/N ratio of 0.89; however, this ratio fell further following the credit ratings issued in the first half of this year. While credit ratings themselves leaned toward upgrades, the outlooks suggest that downward pressure on ratings has increased in the second half of the year.

Among the credit rating agencies, NICE Credit Rating showed the most pronounced negative trend. As of the first half of this year, NICE Credit Rating had 19 positive outlooks and 34 negative outlooks, resulting in a P/N ratio of just 0.56. Compared to the end of last year—when there were 29 positive and 38 negative outlooks, with a P/N ratio of 0.76—the proportion of negative outlooks has increased.

Korea Corporate Rating recorded a P/N ratio of 0.92, with 23 positive outlooks and 25 negative outlooks. While this represents a slight improvement compared to the end of last year—when there were 25 positive and 29 negative outlooks, resulting in a P/N ratio of 0.86—it still remained below 1.

Korea Credit Rating Agency (KCRA) assigned positive outlooks to 18 companies and negative outlooks to 17, with positive outlooks holding a slight edge. At the end of last year as well, positive outlooks outnumbered negative ones, with 24 companies rated positive and 21 rated negative.

The problem is that the disparity across sectors is growing. While the creditworthiness of export-driven companies in sectors such as shipbuilding, defense, and semiconductors—which are benefiting from favorable market conditions—showed an improving trend, downward pressure on credit ratings continues in sectors such as petrochemicals, construction, and the secondary financial sector. Analysts assess that the possibility of credit rating downgrades in the second half of the year remains, particularly for sectors where market recovery is slow and for companies with heavy debt burdens.

Warning signs are particularly growing louder in the financial sector. When combining the rating outlooks for the financial sector from the three credit rating agencies, there were six positive outlooks and 12 negative outlooks. The P/N ratio for the financial sector stood at just 0.50. Korea Ratings assigned three positive and three negative outlooks to the financial sector; Korea Credit Rating assigned two positive and four negative outlooks; and NICE Ratings assigned one positive and five negative outlooks. This reflects ongoing pressures on asset quality and profitability, particularly in sectors with significant exposure to real estate finance, such as savings banks and real estate trusts.

In fact, there were a series of cases in the first half of this year where liquidity risks materialized. According to Korea Corporate Rating, seven companies—including those with overlapping short- and long-term ratings—were assigned a “Default (D)” rating in the first half of the year. Following JTBC’s default, the assignment of default ratings spread to major affiliates of the JoongAng Group, such as JoongAng Ilbo and Contentre JoongAng, and defaults also emerged in securitization structures related to overseas commercial real estate.

In the credit market, the ability of vulnerable companies to refinance their debt is seen as a key variable for the second half of the year as well. This is because, amid persistent interest rate pressures, if the profit-generating capacity of sectors suffering from sluggish business conditions fails to recover, rating outlooks could lead to actual credit rating downgrades.

A credit industry official stated, “Looking solely at the rating results from the first half of the year, it appears that credit conditions have improved because many companies saw their ratings upgraded; however, when examining outlook indicators, the pressure for downgrades in the second half remains significant,” adding, “The K-shaped polarization—where companies showing credit improvement and vulnerable companies diverge by sector—is becoming even more pronounced.”