Major Korean conglomerates experienced sharply divergent credit rating outcomes in the first half of 2026, according to regular reviews conducted by Korea's three credit rating agencies. Joong-Ang Group saw its credit risk escalate rapidly after JTBC failed to repay securitized loans in June, while Lotte Group faced negative outlooks due to ongoing weakness in petrochemicals and retail. In contrast, HD Hyundai, LS Group, and Daewoong Kium Group achieved credit upgrades driven by strong performance in shipbuilding, power equipment, and brokerage operations. The divergent outcomes reflect how industry conditions and financial resilience are creating widening gaps in corporate creditworthiness across Korea's major business groups.
Joong-Ang Group Subsidiaries Downgraded to D After JTBC Loan Default
Joong-Ang Group emerged as the most prominent downgrade case in the first half of 2026. JTBC failed to repay a total of 20.6 billion won in securitized loans in June, including 5.6 billion won to Mir J No. 2 and 15 billion won to Jeil TVBC J No. 2. Following the default, credit rating agencies downgraded multiple Joong-Ang Group subsidiaries to D (default) status. Korea Ratings downgraded JoongAng Ilbo, Content Re JoongAng, and Megabox JoongAng to D. Korea Investors Service also lowered JTBC's credit rating to D. SLL JoongAng, another group affiliate, saw its rating fall from BBB (stable) to B- (under review for downgrade), dropping from investment grade to speculative grade.
Lotte Chemical Outlook Changed to Negative Despite AA- Rating Maintained
Lotte Group faced downward pressure across key subsidiaries during the review period. Lotte Chemical maintained its AA- credit rating but saw its outlook changed from stable to negative. Credit agencies cited prolonged weakness in the petrochemical sector and difficulties in reducing financial burden despite business restructuring efforts. Lotte Chemical recorded an operating profit of 73.5 billion won in Q1 2026 on a consolidated basis, supported by oil price increases and positive lagging effects, but agencies expressed concern about potential re-deterioration in mid- to long-term performance. Korea Seven's rating outlook changed from stable to negative while maintaining its A0 rating. Lotte Engineering & Construction's outlook also shifted from stable to negative while keeping its AA- rating.
HD Hyundai Entities Upgraded to AA- by Three Credit Agencies
HD Hyundai Group demonstrated clear credit improvement in the first half of 2026. All three Korean credit rating agencies upgraded HD Hyundai, HD Hyundai Heavy Industries, and HD Hyundai Electric from A+ (positive) to AA- (stable). The upgrades reflected strong earnings growth in core shipbuilding and power equipment businesses combined with improved financial stability across the group. HD Hyundai Heavy Industries benefited from merger synergies with HD Hyundai Mipo, which strengthened market dominance. Agencies noted that high-margin order backlogs are likely to sustain strong profitability in the medium term. HD Hyundai Electric received positive assessment for expanding its business base and improving operating profitability driven by power equipment demand growth centered in North America. Park Hyun-joon, senior researcher at NICE Investors Service, stated that "the group's operating performance improved significantly, and excellent operating profitability centered on shipbuilding and power equipment sectors is expected to be maintained in the medium term."
LS Cable & System and Kiwoom Securities Receive Positive Rating Actions
LS Group also joined the upward credit trajectory. LS Cable & System and LS both saw their rating outlooks upgraded from stable to positive while maintaining A+ ratings. The changes reflected improving profitability driven by expanding global power demand and increasing sales of high-value products such as ultra-high voltage power lines and submarine cables. LS Cable & System's consolidated order backlog expanded from 2.7 trillion won at the end of 2021 to 8.5 trillion won as of March 2026. Lee Ye-chan, researcher at Korea Investors Service, stated that "amid a favorable demand environment, smooth price reflection absorbs cost burdens, while order volumes centered on high-value products are reflected in sales, significantly enhancing profitability compared to before."
Daewoong Kium Group also achieved upgrades. All three credit agencies raised Kiwoom Securities' rating from AA- to AA and changed its outlook from positive to stable. The upgrade reflected record-breaking operating performance based on online stock trading brokerage and improved results in asset management and investment banking divisions. Kiwoom Capital's rating rose from A- to A, and Kiwoom F&I was upgraded from A- (positive) to A (stable).
An official from the financial investment industry stated that "for groups with heavy financial burdens, credit risk expanded rapidly with just one liquidity event, while conversely, groups with confirmed structural growth and cash generation capabilities in core businesses continued their credit improvement trend. In the second half, polarization in credit ratings by group will continue depending on sustainability of industry recovery, ability to respond to debt maturities, and capacity to support affiliates."
FAQ
What caused Joong-Ang Group's credit downgrades in June 2026?
JTBC failed to repay 20.6 billion won in securitized loans in June, including 5.6 billion won to Mir J No. 2 and 15 billion won to Jeil TVBC J No. 2. Following this default, credit rating agencies downgraded multiple Joong-Ang Group subsidiaries to D (default) status, and SLL JoongAng's rating fell from investment grade BBB to speculative grade B-.
Why did HD Hyundai receive credit upgrades in H1 2026?
All three Korean credit rating agencies upgraded HD Hyundai, HD Hyundai Heavy Industries, and HD Hyundai Electric from A+ to AA- based on strong earnings growth in shipbuilding and power equipment businesses, improved financial stability, and high-margin order backlogs expected to sustain profitability in the medium term.
How much did LS Cable & System's order backlog grow by March 2026?
LS Cable & System's consolidated order backlog expanded from 2.7 trillion won at the end of 2021 to 8.5 trillion won as of March 2026, driven by expanding global power demand and increasing sales of high-value products such as ultra-high voltage power lines and submarine cables.
