Credit Events Put Korea’s Rating Market Back in Focus

By Hat Nim Kim

On 12 June 2026, JTBC missed repayment on KRW 20.6 billion in securitised loans — two securitisation-vehicle facilities of KRW 5.6 billion and KRW 15 billion. NICE Investors Service cut the broadcaster’s rating from BBB/negative to CCC the same day. Korea Ratings lowered the corporate bond rating to BB and cut the commercial paper and electronic short-term note ratings from A3 to B, both placed under review for a further downgrade.

Two months earlier, JR Global REIT failed to repay KRW 40 billion in electronic short-term notes falling due that day and filed for court-led rehabilitation on 27 April. Korea Ratings and Korea Investors Service both moved its ratings to C under review. The following day, Korea Ratings cut from BB+ and B+ to D, and Korea Investors Service cut from C to D.

The two cases followed different rating paths, but both coincided with renewed supervisory and parliamentary attention to South Korea’s credit rating framework. They have put the structure of the market, recent supervisory measures and possible regulatory follow-up back in focus.

A market shaped by licensing

Entry into Korea’s credit-rating market is regulated. Since September 2013, credit rating has been governed under the Capital Markets Act as a business requiring authorisation from the Financial Services Commission (FSC). Agencies must meet capital, personnel and internal-control requirements, and authorisation can be withdrawn. The Financial Supervisory Service (FSS) inspects agencies and can issue management cautions and corrective measures.

The result is a small field. Three agencies dominate corporate ratings — Korea Ratings, Korea Investors Service and NICE Investors Service — with Seoul Credit Rating active in structured and specialised products.

Their grades carry regulatory weight. Ratings feed into eligibility rules for institutional funds, collateral treatment and risk-management standards, and they shape the terms on which companies borrow. Korea also requires public corporate bond issuers to obtain more than one rating, a detail that matters to any foreign issuer building a won-denominated programme.

Concentration has been a known feature for years. In a 2021 competition assessment, the FSC found the market had long been split among three agencies, with a Herfindahl-Hirschman index of about 3,200 and a top-three share of about 97.5% as of 2020. The same document put the US at 3,712 and 95.1%, and the EU at 3,049 and 91.1% on the same measures. Its policy direction was to improve rating quality and market discipline rather than to push for rapid new entry, while treating reform of the licensing system as a medium- to long-term question.

What changed in 2026

Supervisory findings came first. In January, the FSS issued management cautions and corrective measures to all four corporate agencies. Reported findings concerned rating committees whose operation had become formalistic, and weak information barriers between analytical and sales functions. The measures relate to internal procedures rather than to specific ratings.

Then the credit events. The two cases followed different timelines. JTBC’s downgrades came after the missed payment, when NICE moved to CCC, and Korea Ratings cut the bond to BB while taking commercial paper to B. JR Global REIT’s ratings were cut in quick succession around its missed payment and rehabilitation filing. A negative outlook or a review for downgrade signals the possibility of a further cut but does not itself change the assigned rating category, so investors weigh such signals alongside the current rating and other available information.

And then the political calendar. At the parliamentary audit on 12 October, lawmakers raised questions about the structure of the rating market and called for further consideration of entry requirements. The Korea Fair Trade Commission was asked to examine competitive conditions in the sector, and the FSC was asked to provide views on possible regulatory improvements. No specific changes have been confirmed.

The current discussion follows earlier efforts to refine the framework. In 2016, the FSC announced measures addressing rating practices, market discipline and the conditions for new entrants, and some follow-up steps were taken. The 2026 debate offers a further opportunity to observe how the authorities approach these questions.

What the market’s own scorecard says

KOFIA’s 2026 assessment showed mixed results across individual measures. In the survey component, which covered 102 market participants, overall satisfaction with credit-rating capabilities remained at 3.82 out of five, unchanged from the previous year. Satisfaction with rating accuracy rose slightly from 3.81 to 3.82, and the usefulness of predictive indicators improved from 3.81 to 3.85. Satisfaction with rating stability declined from 3.83 to 3.78.

Taken together, the survey results show perceptions of rating capabilities holding broadly steady, with individual measures moving in different directions.

What to watch

Three threads are worth following into next year. The first is supervisory follow-up: whether the January measures change how rating committees document decisions, and how firmly analytical and sales functions are separated. The second is the entry-rule discussion — whether the October requests produce a formal review, or remain requests. The third is the market itself: the next KOFIA assessment, and rating actions in corporate bonds, commercial paper and electronic short-term notes, will show how conditions develop.

For issuers and investors in Korea’s credit markets, the practical point is that ratings operate within a licensed and concentrated market and can affect investment eligibility, collateral terms and borrowing costs. The immediate question is whether the current debate leads to a formal review of entry rules or further supervisory measures.

References

1. Seoul Economic Daily (English) — JTBC defaults on 20 billion won debt; credit rating cut to CCC (12 June 2026)
2. SBS News (English) — JTBC credit rating downgraded to CCC following 20.6 billion won default (12 June 2026)
3. Chosun Ilbo (English) — JR Global REIT applies for rehabilitation after default (28 April 2026)
4. Asia Business Daily (English) — Despite stable building values, why JR Global REIT filed for rehabilitation (30 April 2026)
5. The Brussels Times — Finance Tower owner JR Global REIT files for bankruptcy protection (April 2026)
6. Korea Herald — Regulators consider stand-alone rating
7. Seoul Economic Daily (English) — NICE Investors Service tops Korea credit rating agency assessment (9 June 2026)
8. Korea JoongAng Daily — National Assembly kicks off annual audit of government agencies (October 2026)
9. Financial Services Commission — Assessment of competition in the credit rating industry (2021, in Korean)
10. Financial Services Commission — Measures to advance the credit rating market (16 March 2016, in Korean)
11. Financial Supervisory Service — Management cautions and corrective measures issued to four credit rating agencies (January 2026, in Korean)
12. Financial Services Commission — Press releases, English edition