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Moody's reviews SK Hynix for downgrade
Moody's Investors Service said it placed SK Hynix Inc.'s Baa2 issuer and senior unsecured ratings on review for downgrade and changed the outlook to under review from negative.
SK Telecom Co., Ltd., the parent of SK Hynix, prompted the review by reporting it plans to spin off its non-telecom investments, including its 20% stake in SK Hynix, into a new sister company, tentatively called SKT Investment Co., Ltd., Moody’s said. SK Telecom plans to complete the proposed spinoff by November 2021.
"The review for downgrade reflects our view that SK Hynix's new parent will be less able than SKT to provide extraordinary support. Consequently, once the parent's split is substantially completed, SK Hynix's ratings will likely no longer benefit from the explicit one-notch uplift for potential extraordinary parental support," said Sean Hwang, a Moody's assistant vice president and analyst, in a press release.
"The rating action also reflects the improving core earnings of the remaining entity at SKT, driven by accelerating 5G subscriber migration in the mobile business and incremental growth in the media business. The increasing earnings should allow SKT to gradually reduce its leverage over the next 12-18 months," added Hwang.
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