[Edaily Marketin LEE GEON-EOM Reporter] In the first half of this year, corporate credit ratings shifted toward upgrades for the first time in four years. The average ratio of credit rating upgrades to downgrades among the three major domestic credit rating agencies exceeded 1:1, indicating that more companies saw their ratings rise than fall.

However, some observers point out that it is difficult to take this improvement at face value, as it is largely an optical illusion caused by a concentration of upgrades in booming sectors such as shipbuilding and defense. This is because the boom in the shipbuilding and defense sectors is merely a spillover effect that has lifted overall indicators, while the petrochemical, construction, and secondary financial sectors continue to face intense downward pressure.

Upward-to-Downward Ratio Breaks 1:1 Mark for First Time in Four Years… Indicators Show ‘Upward Trend’

On the 9th, E-Daily compiled and analyzed data on credit rating changes for the first half of this year from three domestic credit rating agencies—Korea Ratings (KR), Korea Credit Rating (KCR), and NICE Credit Rating (NICE CR)—and found that the overall ratio of upward to downward rating changes stood at 1.16.

The total number of upgrades (59) surpassed the number of downgrades (51), pushing the ratio above 1. The simple average of the ratios from the three agencies also stood at 1.2, indicating a clear trend toward upgrades. The upgrade-to-downgrade ratio is calculated by dividing the number of upgrades by the number of downgrades; exceeding 1 means there were more companies whose credit ratings rose than those whose ratings fell.

This marks the first time in four years—since 2022 (1.34 times)—that the credit rating agencies’ upgrade-to-downgrade ratio has exceeded 1.0. The downward trend in credit ratings that had weighed on the credit market over the past three years has clearly reversed as of the first half of this year.

Looking at the trend in the combined upgrade-to-downgrade ratio of the three credit rating agencies, it remained well below 1:1 at 0.75 in 2023 and 0.63 in 2024, and even on an annual basis in 2025, it stood at 0.99 (68 upgrades and 69 downgrades), failing to break away from the downward trend.

In detail, the figures were as follows: △ Han Shin Rating at 1.46 times (19 upgrades, 13 downgrades), △ Han Ki Rating at 1.21 times (17 upgrades, 14 downgrades), and △ NICE Credit Rating at 0.96 times (23 upgrades, 24 downgrades). While Han Shin Rating and Han Ki Rating recorded a clear predominance of upgrades, leading an overall rebound, Na Shin Rating still showed a slight predominance of downgrades.

An official from NICE Credit Rating explained, “As the cumulative effects of high interest rates and high inflation have led to shrinking consumption and worsening financing conditions, the burden has increased, particularly for companies with low credit ratings.” The official added, “Although there were positive factors, such as rating upgrades in some sectors experiencing improved business conditions and a booming stock market, their impact on low-credit companies was limited; consequently, we believe the trend toward downgrades has persisted.”

The Illusion of a Boom in Shipbuilding and Defense… The Lower Tier Awaits a ‘Downward Trigger’

The prevailing view in the market is that, despite the ratio of credit rating upgrades to downgrades exceeding 1:1, it is difficult to conclude that the overall macroeconomy has entered a recovery phase. The assessment is that this is the result of a deepening “K-shaped polarization,” where performance varies drastically by sector and corporate group, rather than a broad economic improvement.

In fact, groups such as HD Hyundai, LS, Hanjin, and Daewoo Kiwoom—which have benefited from favorable business conditions—led the way in credit rating upgrades, driven by strong earnings. In the shipbuilding, defense, and power equipment sectors—including HD Hyundai Heavy Industries, Hyundai Rotem, and Poongsan—notable improvements in profitability served as key factors for the upgrades.

Conversely, sectors occupying the lower end of the K-shaped curve are dominated by a strong downward trend. The petrochemical sector—including Lotte Chemical, LG Chem, and Yeocheon NCC—as well as the construction and rechargeable battery sectors, faced significant downward pressure on their ratings due to unfavorable market conditions.

In addition, the deterioration in the financial health of the secondary financial sector—including savings banks and real estate trust companies, which were further burdened by real estate risks—became a major factor eroding creditworthiness. In the case of the JoongAng Group, the default by its affiliate JTBC triggered a contagion of credit risk, leading to an unprecedented situation where key affiliates such as JoongAng Ilbo and Contentre JoongAng were collectively downgraded to “D” (Default).

These contrasting fortunes are clearly reflected in the credit outlooks of individual companies. As of the end of last month, only 60 companies received a “positive” outlook from credit rating agencies—indicating the possibility of a future rating upgrade—while 78 companies were assigned a “negative” outlook, signaling a potential downgrade. Compared to the end of the previous year, the number of companies with a positive outlook has dropped by nearly 23%, suggesting that downward pressure is pervasive across the market.

Kim Sang-man, Executive Director at Hana Securities, noted, “The shipbuilding, defense, and power equipment sectors—which had been in a prolonged period of sideways movement—led the ratings upgrades by benefiting from U.S.-related booms,” adding, “Since these sectors tend to have long upward cycles, the trend of credit rating polarization is likely to continue.”

An official from a credit rating agency also pointed out, “While a few sectors, such as certain power equipment segments, have shown unexpectedly strong performance—creating the illusion of an upward trend—it is difficult to view this as a sign of an overall economic recovery,” adding, “Since the positive momentum has not spread to lower-tier companies, it is hard to guarantee that the current positive trend will continue.”