JoongAng Group affiliates' credit ratings slashed to 'C' after receivership filing

Credit rating agencies have drastically downgraded the credit ratings of several JoongAng Group affiliates, including Megabox JoongAng and Contry JoongAng, to 'C' following their parent company's filing for court receivership. This move reflects severe liquidity risks and mounting financial pressures across the conglomerate.

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The credit ratings reflect the fact that JoongAng Group affiliates filed for court receivership on the 14th. We plan to further downgrade the credit ratings to D when the court decides to accept the receivership application.

Korea Ratings downgraded the corporate paper and electronic short-term debt ratings for Megabox JoongAng and Contry JoongAng from 'B' to 'C', placing them on a watchlist for further downgrade. SLL JoongAng's ratings were also reduced earlier, with its unsecured corporate bonds, commercial paper, and electronic short-term debt moved to 'BB' and 'B' ratings with negative outlooks. Korea Ratings stated that further downgrades to 'D' are expected once the court officially accepts the receivership applications.

Agencies cited the JoongAng Group's overall financial burden, exacerbated by the sustained poor performance of key affiliates like JTBC and JoongAng Ilbo. The group's combined debt, including that of JoongAng Holdings, JTBC, and Contry JoongAng, is projected to reach 2.8 trillion won by the end of 2025. This level of debt is considered excessive relative to the group's cash-generating capacity.

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Liquidity risks have significantly expanded across the JoongAng Group affiliates, including the occurrence of repayment defaults on securitized loan principal and interest (borrowed money).

Analysts highlighted the significant financial interconnectedness within the group, noting that the weakening financial health of major affiliates poses a systemic risk. JoongAng Ilbo alone faces total debt of 288.7 billion won by the end of 2025, in addition to guarantees for affiliated companies amounting to 225 billion won. The agencies warned that the group's weakened access to capital markets and the potential for liquidity risk contagion among affiliates are major concerns.

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The JoongAng Group's overall financial burden is excessive, with the sustained poor operating performance of major affiliates like JTBC and JoongAng Ilbo.