S&P ups LG Chem view to positive

S&P said it revised LG Chem Ltd.’s outlook to positive from stable and affirmed the BBB+ issuer and issue ratings.

“The outlook revision on LG Chem mainly reflects its sizable financial buffer despite significant planned investments. On Jan. 21, 2022, the company executed an IPO of its battery production arm LG Energy Solution. LG Energy Solution received Korean won (KRW) 10.1 trillion by issuing new shares and LG Chem secured KRW 2.6 trillion through a partial sale of shares in the former. LG Chem now owns 81.8% of LG Energy Solution,” S&P said in a press release.

The agency said it sees LG Chem’s financial metrics improving over the next 12-24 months on a healthy leverage profile with a large cash balance and a diversified business portfolio.

“Under our base-case scenario, we anticipate LG Chem's ratio of debt to EBITDA to be well below 1x in 2022-2023, compared with our estimate of 1x-1.2x in 2021 and 1.8x reported in 2020,” S&P said.

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