South Korean firms may experience a credit crisis this year after a number of them have suffered cuts in their credit ratings, market observers said Sunday.
According to Korea Ratings, one of the country's three largest credit appraisers, the number of local firms suffering credit rating downgrades in 2015 came to 61, nearly matching the number of companies suffering credit downgrades in 1998 amid the Asian financial crisis at 63.
What is more troubling may be that companies in nearly all industrial sectors suffered credit rating downgrades, including those in construction, refinery, shipping and logistics.
In addition to those suffering credit rating downgrades, 30 companies were given negative outlooks on their future conditions last year, up from 11 in 2013 and 29 in 2014.
"A large number of companies from all business sectors are currently suffering from credit rating downgrades due to a prolonged economic slump," said Song Tae-joon, an official from Korea Ratings. "They will likely continue suffering from worsened credit ratings this year as it is hard to expect a quick improvement in economic conditions."
A dip in credit ratings is also feared to cause liquidity problems.
In 2015, the amount of corporate bonds issued and exchanged came to 120.23 trillion won (US$102.1 billion), down 24.7 percent from the previous year. (Yonhap)
