S&P upgrades SK Innovation credit rating to BBB-

Global credit rating agency Standard & Poor's (S&P) announced on Friday that it upgraded SK Innovation Co.'s long-term credit rating from a non-investment grade of "BB+" to an investment grade of "BBB-."

S&P determined that SK Innovation's merger with SK E&S has reduced its business risk.

"With the addition of SK E&S's stable operations, we expect that the volatility of performance due to the high economic sensitivity of the refining and chemical sectors will decrease," said S&P.

"SK Innovation will be able to utilize the cash flow generated from its city gas and power generation businesses for necessary investments," it continued.

"The dividend payout ratio of the merged entity, SK Innovation, is expected to be lower than that of SK E&S before the merger, allowing some of the dividends that SK E&S has paid to the parent company to be retained internally," added. 

Regarding performance, S&P projected that while this year is expected to be weak, there will be a slight recovery next year.

Write to Hyeon-woo Oh at ohw@hankyung.com