Rating agencies downplay Lee's arrest

By Kim Yoo-chul

Credit rating agencies said that the arrest of Samsung Group’s de facto leader Lee Jae-yong would not affect the credit ratings of the conglomerate’s major affiliates including Samsung Electronics.

Fitch Ratings Director Shelley Jang said that the imprisonment of Samsung Vice Chairman Lee has no immediate impact on the credit rating of Samsung electronics although this could negatively impact investors’ sentiment in the short term.

“Samsung Electronics is operating under professional management teams of business segments, so the absence of the owner will not have an impact on Samsung's day-to-day operations,” Jang said. “There was also no impact on the operations of other chaebols when their heads were arrested previously. As Samsung's credit profile is based on its fundamentals and strength of its businesses, negative sentiment on Samsung could be offset by the company’s solid performance.”

Nevertheless, Jang noted that its long-term strategic investment decisions like major M&A or overseas expansion plans could be delayed.

“We think this event will prompt Samsung to accelerate its efforts to improve management transparency and corporate governance. We expect the company to reshuffle its corporate structure,” Jang said.

Stephan Han, lead analyst at Standard and Poor’s in Hong Kong, concurred.

“General thoughts are that it’s still premature to assess any impact given that this is not the final court ruling. Samsung Electronics’ day-to-day operation is not necessarily undermined significantly by this issue,” Han said.