[E-Daily Marketin Reporter KIM YEON-SEO ] SK GeoCentric (AA-), a petrochemical subsidiary of SK Innovation(096770), is set to issue corporate bonds worth up to 160 billion won. Although its first-quarter operating performance and financial indicators improved this year, attention is focused on whether the company will be able to attract institutional investors, given the ongoing slump in the petrochemical industry and its “negative” credit rating outlook.

According to the investment banking (IB) industry on the 31st, SK GeoCentric plans to issue corporate bonds totaling 80 billion won this coming September. The issuance will consist of two tranches: a 2-year and a 3-year maturity. Depending on the results of the bookbuilding process, the company plans to increase the issuance amount to a maximum of 160 billion won.

Six firms—NH INVESTMENT & SECURITIES, Korea Investment & Securities, SKSecurities, Shinhan Investment Securities, MIRAE ASSET SECURITIES, and KIWOOM Securities—will serve as lead underwriters for the corporate bond issuance. The bookbuilding process for institutional investors is scheduled for the 15th of next month, with the bonds set to be issued on the 22nd of the same month.

February Corporate Bond Bookbuilding Secured Target Amount

Previously, in the corporate bond bookbuilding conducted last February, SK GeoCentric received 150 billion won in purchase orders against a target of 100 billion won, successfully meeting its target amount. Although the offering was secured at a double-digit premium over the individual market average interest rate, the company was assessed to have performed well, as it managed to attract investor demand despite concerns over a deteriorating petrochemical market and a potential credit rating downgrade.

However, forecasts suggest that this demand forecast will not be easy either. Although SK GeoCentric’s credit rating of “AA-” is considered investment-grade, its rating outlook is “negative.” A negative outlook typically indicates the possibility of a credit rating downgrade within the next one to two years.

SK GeoCentric recorded revenue of 9.8976 trillion won last year, a 13.9% decrease from the previous year. Earnings before interest, taxes, depreciation, and amortization (EBITDA) shifted from a surplus of 147.8 billion won in 2024 to a deficit of 46.2 billion won in 2025.

Performance has improved so far this year. First-quarter revenue reached 2.9063 trillion won, a 7.3% increase from the same period last year. EBITDA also turned positive at 159 billion won, recovering from a 52.5 billion won deficit in the first quarter of last year.

Factors Leading to Downgrade Met… Key Question Is Whether Earnings Improvement Will Continue

However, the criteria for a credit rating downgrade have already been met. Amid an EBITDA deficit last year, compounded by a contraction in business scale due to a large net loss, the debt-to-equity ratio stood at 35.8% at the end of last year. Consequently, the metrics for EBITDA relative to net debt and the debt-to-equity ratio met the requirements for a credit rating downgrade.

In the first quarter of this year, coverage ratios recovered significantly thanks to improved operating performance. The debt-to-EBITDA ratio also fell to 31.0% due to debt repayments, temporarily easing the financial burden.

Han Min-soo, a senior analyst at Korea Ratings Corporation, predicted, “While earnings volatility will persist for the time being due to escalating geopolitical risks, full-year earnings are expected to improve compared to last year, driven by strong performance in the first half of this year.”

He added, “In the short term, we need to monitor whether the positive earnings trend and the easing of financial burdens continue,” and stated, “As structural reforms are underway in the domestic petrochemical industry, we plan to monitor whether operating performance improves and the extent to which financial burdens are alleviated through asset sales and other measures.”