Research Update: SK Innovation Outlook Revised To Negative On Aggressive Financial Policy; 'BBB' Rating Affirmed; Issue Rating Lowered

We believe the financial policy of SK Innovation Co. Ltd. (SKI) has become more aggressive over the past 12 months, with increasing capital investments, shareholder returns, and debt. Volatility in oil refining and SKI's leveraged balance sheet will weigh on the Korean company's profitability and credit quality, in our view. On Feb. 10, 2020, S&P Global Ratings revised its rating outlook on SKI to negative from stable. We affirmed the 'BBB' long-term issuer credit rating on the company. We also lowered the long-term issue rating on SKI's senior unsecured notes to 'BBB-' from 'BBB.' The negative outlook on SKI reflects our view that the company's debt-to-EBITDA ratio will hover around our downgrade trigger over the next 12-24 months. We revised

...- We believe the financial policy of SK Innovation Co. Ltd. (SKI) has become more aggressive over the past 12 months, with increasing capital investments, shareholder returns, and debt. - Volatility in oil refining and SKI's leveraged balance sheet will weigh on the Korean company's profitability and credit quality, in our view. - On Feb. 10, 2020, S&P Global Ratings revised its rating outlook on SKI to negative from stable. We affirmed the '###' long-term issuer credit rating on the company. We also lowered the long-term issue rating on SKI's senior unsecured notes to '###-' from '###.' - The negative outlook on SKI reflects our view that the company's debt-to-EBITDA ratio will hover around our downgrade trigger over the next 12-24 months....

Research Update