Research Update: SK Innovation 'BBB-' Rating Affirmed On Earnings Rebound And Asset Sales; Outlook Remains Negative

SK Innovation Co. Ltd.'s (SKI) credit metrics will recover substantially over 2021-2022 due to a rebound in earnings and a sizable asset sale by the Korea-based oil refining company. However, aggressive investments for expanding SKI's electric vehicle (EV) battery production are likely to keep its debt high. This will leave a narrow ratings buffer given high volatility in the refining and chemical industry, as well as uncertainty over rapidly ramping up the company's production capacity for EV batteries. On Oct. 7, 2021, S&P Global Ratings affirmed its 'BBB-' issuer credit rating on SKI. At the same time, we affirmed the issue credit rating on the company's outstanding debt at 'BB+'. We also affirmed our issuer credit rating on SKI's subsidiary

...- SK Innovation Co. Ltd.'s (SKI) credit metrics will recover substantially over 2021-2022 due to a rebound in earnings and a sizable asset sale by the Korea-based oil refining company. - However, aggressive investments for expanding SKI's electric vehicle (EV) battery production are likely to keep its debt high. This will leave a narrow ratings buffer given high volatility in the refining and chemical industry, as well as uncertainty over rapidly ramping up the company's production capacity for EV batteries. - On Oct. 7, 2021, S&P Global Ratings affirmed its '###-' issuer credit rating on SKI. At the same time, we affirmed the issue credit rating on the company's outstanding debt at '##+'. We also affirmed our issuer credit rating on SKI's subsidiary SK Geo Centric Co. Ltd. (SKGC) at '###-'. - The negative outlook on SKI and SKGC indicates the group's financial metrics have limited headroom for the ratings over the next 12-18 months given heightened debt levels....

Research Update