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Biz News Korea(Eng)

Korea’s E-Land Group companies may face more downgrade in credit rating

Collected: 2016.03.24

Distributed: 2016.03.25

Source: Go Direct

Investor anxiety is growing over the possible downgrade in the credit rating of South Korean retail and fashion conglomerate E-Land Group`s units. Its core units like E-Land World, E-Land Retail and E-Land Park have succeeded in raising multibillion won in the country’s corporate bond market although none of them are publicly trading companies.

The rating on corporate bonds for E-Land World and E-Land Retail were downgraded by one notch from BBB+ to BBB late last year. The rating of commercial papers issued by E-Land Park also dropped from A3+ to A3, and investors have become nervy about more cuts down the road.

In a recent seminar, Korea Investors Service Inc. indicated that E-Land’s companies may not meet requirements for BBB, according to an industry source.

Another local rating company Korea Ratings Corporation also turned pessimistic about E-Land amid slowdown in China and other parts of the world, fierce competition in the fashion industry and poor performance of companies that had been acquired by the group. Companies under the group cannot meet their debt obligations through their earnings, an official at the rating company said.

The group’s liquidity prospects would hinge on the sale of its discount chain store Kim’s Club that could pull in more than 1 trillion won ($861.54 million) from selling operation in the big-box chain and the real estate of New Core Department store in southern Seoul. Three bidders have been shortlisted as potential buyers.

By Kim Hye-soon

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