This article was displayed on the ChosunBiz MoneyMove (MM) site at 5:07 p.m. Oct. 17, 2025.
Global credit rating agency Moody's recently upgraded the outlook for Shinhan Investment Corp., while lowering Korea Investment & Securities' credit rating by one notch, citing concerns about financial soundness due to its high-risk, high-return strategy. Moody's appears to have viewed favorably a stable "backing" such as parent company support rather than conservative venture capital investments. Some in the industry say the assessment could negatively affect Korea Investment & Securities as it seeks approval to operate an individual management account (IMA) business.
On the 17th, credit rating industry sources said Moody's lowered Korea Investment & Securities' long-term foreign-currency issuer rating and senior unsecured debt rating from Baa2 to Baa3. Baa3 is the lowest level within investment-grade ratings. The short-term rating was lowered from P-2 to P-3, and the standalone assessment was downgraded from Ba1 to Ba2. Moody's investment-grade scale comprises four rating categories and 10 notches, from the highest Aaa to the lowest investment-grade Baa3.
Moody's lowered the rating because Korea Investment & Securities' risk appetite is higher than peers and its funding structure has weakened. As of June 30, Korea Investment & Securities' risk appetite ratio stood at 24.5%, above the peer average (20%). Moody's also noted that the company's large commercial paper issuance could exacerbate a maturity mismatch between asset and liability. The outstanding balance of its commercial paper is 18 trillion won, equivalent to 174% of its equity. At the end of last month, it also carried out a paid-in capital increase of 900 billion won against its parent, Korea Investment Holdings.
Moody's, meanwhile, upgraded the outlook for Shinhan Investment Corp. from negative to stable, citing improvements in leverage ratios, a favorable operating environment and a recovery in profitability.
Moody's said, "Shinhan Investment Corp. has had internal control issues in recent years, but strengthening enterprise-wide internal controls and digital investment should help moderate future profit volatility and enhance risk management capabilities." It also reflected that, as a 100% subsidiary of Shinhan Financial Group, the company has increased profit contribution within the group and holds long-term strategic importance for the group's capital markets.
Industry observers note Moody's placed emphasis on the "possibility of parent company support" as a key basis for its credit assessment. The securities industry inherently carries many risk factors and, compared with other financial firms, has a relatively fragile capital structure, making the identity of the parent company inevitably important.
Shinhan Investment Corp.'s standalone credit rating is Ba1, similar to Korea Investment & Securities, but its final long-term foreign-currency rating corresponds to A3, four notches higher. Moody's explained that Shinhan Financial Group has limited subsidiaries' risk-weighted asset growth to enhance corporate value and, because Shinhan Investment Corp. is a bank-affiliated securities firm, it has good access to funding through its parent.
The industry consensus is that Moody's decision will not have a large impact on domestic credit rating companies' assessments. However, some worry Korea Investment & Securities' IMA business approval could be negatively affected.
IMA operators are obligated to repay principal, so their financial soundness must be an important factor in evaluations. In particular, Moody's points about high reliance on short-term funding and high risk appetite relate directly to risk management capabilities, which are major review items.
An industry source said, "Looking at Moody's long-term foreign-currency ratings for securities firms, those with bank parents, including Shinhan Investment Corp., IBK Securities, KB Securities and NH Investment & Securities, are clustered in the A1–A3 range, while firms without such parents, like Korea Investment & Securities, Mirae Asset Securities and Samsung Securities, received Baa2–Baa3 ratings." The source added, "But Moody's tends to be more conservative than other global raters such as S&P, and these ratings are based on foreign currency, so domestic rating agencies' ratings are unlikely to change significantly."