Global central bank rate hikes tax debt companies 'worst'

The outlook for battery petrochemical companies with a surge in foreign currency debt is gloomy as central banks around the world announced a larger-than-expected rate hike on the 22nd and stocks fell to the lowest since June.
The stock market, which has been tempting stock buyers with mouth-watering returns on corporate debt, has shifted to cash holdings following interest rate hikes, and stricter U.S. capital raising standards have raised a bleak prospect for debt-heavy companies, Bloomberg reported today. .
Central banks from Norway to South Africa joined the Fed's streak of rate hikes today, risking a recession and curbing price increases with rate hikes, The Wall Street Journal reported today.
According to a Goldman Sachs analysis note on the same day, analysts readjusted that the Fed would raise rates to 4.5-4.75%, higher than expected 4-4.25%. and predicted a continuous increase following the 0.75%p increase on September 21.
The US base rate for September is 3~3.25%, far higher than Korea's 2.50%, and the Bank of Japan is still sticking to its ultra-low interest rate policy.
The Fed will hold two additional FOMC meetings in November and December.
Korea's producer price index fell 0.3% in August compared to July, but only industrial products fell 1.4%, depending on an 8.6% decline in coal and oil imports.
In addition, city gas prices rose 14.1% and electricity, gas, water supply, and waste rose 3.6%, resulting in a bigger increase in utility rates and agricultural, forestry and fishery products by 2.5%.
Deputy Prime Minister Choo Kyung-ho and the Bank of Korea revised the price from ‘price peak’ to ‘October’ at the end of September and early October, but the possibility of extension to next year increased.
The government and brokerage firms' 'October price point' is based on the fact that the consumer price index rose by 5.7% in August (compared to the same period last year) and fell by 0.6%p from July (6.3%). was excluded.
Credit rating agencies Moody's and S&P gave LG Energy Solutions a corporate credit rating of 'Baa1' and 'BBB+', respectively, on the 22nd.
Moody's said, "We are increasing facility investment to expand production capacity, and there is a risk of large-scale borrowings and lower profitability." S&P said, "LG Energy Solutions' facility investment last year was 3.6 trillion won this year It is expected to increase significantly to a maximum of 8 trillion won and over 10 trillion won in 2024,” he said.
LG Electronics' provisioning was the largest at 2.983 trillion won at the end of last year and 2.268.4 trillion won in the second quarter of this year.
LG Electronics, a battery pack maker focused on recalls, paid 700 billion won last year for the recall cost sharing system with LG Energy Solution, which was spun off as a battery manufacturer last year.
Provisions are liabilities accumulated from recalls and after-sales (AS) litigation, which increases as the business grows.
With the exchange rate exceeding 1,400 won, the domestic battery and petrochemical industries, where dollar debt is concentrated, overlapped with large-scale overseas investments, resulting in a surge in foreign currency debt.