Samsung Electronics credit risk falls

Bloomberg

Samsung Electronics Co.’s credit risk falls after Moody’s Investors Service lifted its rating to the same level as the South Korean government, citing the company’s profitability and strong finances.
The senior unsecured debt rating of Korea’s biggest company was raised to Aa2, the third highest level, from Aa3, Moody’s said. The cost to insure the technology giant’s debt against nonpayment with credit-default swaps fall to 36.1 basis points after the upgrade, near a four-month low, CMA data show.
Moody’s said it expects the Suwon-based company to maintain solid earnings over the foreseeable future and strong business and financial profile through business cycles. The ratings firm also pointed to Samsung’s “exceptionally healthy balance sheet.”
Samsung Electronics has a massive presence in Asia’s fourth-biggest economy, with its revenue equivalent to around 13.5% of Korea’s GDP in 2021, according to Bloomberg calculations. It joins a small group of companies worldwide with the same credit score as the home sovereign.
That includes Apple Inc. and Microsoft Corp., which have the top Moody’s rating, and Toyota Motor Corp., which has an A1 grade, the same as the Japanese government.
While the global memory chip industry will likely undergo a significant cyclical downturn over the next several quarters, Samsung will remain solidly profitable, according to Moody’s. The company had a net cash position of 108 trillion won ($80 billion) as of June 30, while the total amount of public bonds and loans outstanding was $430 million, according to data compiled by Bloomberg.