All three domestic credit rating agencies downgraded the outlook for SK Siltron's credit rating, which Doosan Group agreed to acquire, to "under review for downgrade."
NICE Investors Service said on the 3rd it will keep SK Siltron's senior unsecured bonds and commercial paper ratings at "A+" and "A2+," respectively. However, it said the rating outlook was moved from "stable" to under review for downgrade.
Accordingly, the three domestic credit rating agencies—Korea Ratings, Korea Investors Service, and NICE Investors Service—aligned SK Siltron's long- and short-term ratings at "A+" and "A2+," and the outlook at "under review for downgrade."
The downgrade in outlook is related to SK Group selling its SK Siltron equity to Doosan Group.
On the 31st of last month, SK signed a contract to sell 70.61% of SK Siltron—combining its held equity and total return swap (TRS) contract equity—to Doosan for about 2.3 trillion won. The deal is scheduled to close on Jan. 31 next year.
Lee Ye-ri, a senior researcher at NICE Investors Service, said, "SK Siltron's credit rating had incorporated a one-notch uplift reflecting the potential for support from the SK group in case of need," and added, "Given that Doosan Group's credit strength (long-term BBB+) is lower than the company's standalone credit profile, the group-related uplift will be removed once the sale is completed."
She continued, "Given the nature of mergers and acquisitions (M&A), where uncertainty remains until final closing, the signing of the main contract alone does not change the rating," and explained, "We plan to determine the final rating at the time when the transaction is substantively completed, such as upon payment of the remaining balance."
She added, "We also plan to review the overall progress, including full payment of the acquisition price, and any changes in the business relationship with SK hynix," while assessing, "However, considering the company's strong position in the wafer market and stability of transactions with key customers, the likelihood of deteriorating business stability due to the change in group affiliation is not high."