Moody's confirms SK with negative outlook

Moody's Investors Service confirmed SK Corp. and the guaranteed debt of Momenta (Cayman) at Ba2 with a negative outlook, ending a review begun in March.

Moody's said the confirmation considers the recent decision by SK Corp.'s board of directors to participate in a proposed work-out plan to normalize operations at SK Networks (formerly SK Global Co.).

Moody's said the confirmation reflects SK Corp.'s position as South Korea's largest oil refiner and improving, albeit still volatile, refining and petrochemical margins.

The rating also recognizes the supportive regulatory environment prevailing in the refining sector. Moody's believes that the strategic importance of the oil sector to South Korea as well as SK Corp.'s leading share of the refining and marketing sectors will likely translate into government assistance, given the importance of maintaining stability in the domestic oil market.

At the same time, the rating reflects SK Corp.'s increased financial leverage due to the write-offs and provisions raised with respect to SK Networks and reduced financial flexibility resulting from its constrained access to bank credit facilities in recent months.

Moody's said the negative outlook reflects SK Corp.'s continued liquidity challenges and the ongoing execution risk associated with the work-out plan's implementation, the failure of which could materially impact the company's operations.

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