The Korea Herald

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SK E&S outlook revised to negative due to higher debt

By 박한나

Published : Aug. 30, 2016 - 10:52

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[THE INVESTOR] S&P Global Ratings revised its outlook on SK E&S, South Korea’s power generation and metropolitan gas distribution firm, to “negative” from “stable” on higher debt and weaker profitability, the global credit rating agency said on Aug. 30.

“We expect SK E&S to face profitability pressure in its power generation business over the next one to two years, mainly due to weak electricity selling prices in Korea,” said S&P credit analyst Park Jun-hong.

S&P said it also expects that the Korea-based utility company’s weak operating performance and higher debt as a result of aggressive investments could weaken its credit quality over the next 12 months.

These investments include a new liquefied natural gas power plant in Jangmoon and combined heat and power plant in Wirye, according to S&P. 



The agency affirmed its “BBB” long-term corporate credit rating on the company and “BB+” long-term issue rating on its subordinated perpetual capital securities.

“We affirmed the ratings because we expect SK E&S’ operating performance to improve from 2017 onward because of additional profits from its new power plants,” said Park.

By Park Han-na (hnpark@heraldcorp.com)