Shinpyungsa's Capability 'All-Time High'.. Hanshinpyung 'Excellent'

[Asia Economy Reporter Hwang Junho] The capabilities of credit rating agencies have reached an all-time high. Korea Credit Rating and NICE Credit Rating received high scores in various areas such as the accuracy and stability of credit ratings and the usefulness of predictive indicators.

The Korea Financial Investment Association announced the results of this year's credit rating agency capability evaluation on the 25th after deliberation by the evaluation committee. This evaluation consists of a quantitative assessment (50%) that measures characteristics by sector to determine whether credit ratings are overestimated (using quantitative indicators such as default rates and rating maintenance rates) and a qualitative assessment (50%) conducted through surveys of 104 bond analysts and asset management experts.

The evaluation results showed that the capabilities of the three domestic credit rating agencies scored 3.87 out of 5, the highest level since the evaluation began in 2017. In particular, the accuracy of credit ratings scored 3.94, up from 3.79 last year. This indicates a significant improvement in the accuracy of credit ratings assigned by the agencies.

In the quantitative evaluation of accuracy, the default rate for investment-grade ratings was 0% across the board. As a result, the investment-grade default rate has remained at 0% over the past five years. In the qualitative evaluation, Korea Credit Rating received high scores, making it the agency with the most accurate ratings overall.

Korea Credit Rating also ranked highest in the stability of credit ratings and the usefulness of predictive indicators.

In the quantitative evaluation of stability, NICE Credit Rating achieved the highest scores for rating maintenance rates (98.3% over the past 3 years, 97.8% over the past 5 years). Conversely, Korea Credit Rating received relatively higher scores in the qualitative evaluation.

In the quantitative evaluation of usefulness, Korea Credit Rating had the highest consistency rate between credit rating predictive indicators (rating outlook, rating watch) and actual credit rating changes (100% over the past 3 years, 98.3% over the past 5 years). It also received high scores in the qualitative evaluation.

Separately from this evaluation, the Korea Financial Investment Association conducted a survey on credit rating agencies' efforts in market communication. As a result, Korea Credit Rating and NICE Credit Rating received high scores for appropriately presenting opinions on macroeconomic and industrial factors affecting corporate credit risk through issue reports and other means.

Kim Pilgyu, chairman of the evaluation committee (Capital Market Research Institute), stated, "The evaluation results are the outcome of the credit rating agencies' continuous efforts, and I hope they will not be complacent with the current results but continue to strive forward." He added, "The evaluation committee will also continue to review the capability evaluation criteria to enhance the reliability and reputation of credit rating agencies."

This content was produced with the assistance of AI translation services.