South Korea’s conglomerates jacked up their bond sales this year as they capitalized on low borrowing costs to repay or refinance maturing debts, with shipbuilding, construction and steelmaking businesses raising more money than they paid off in debt, industry data showed on Friday.
According to the data compiled by Hana Daetoo Securities Co., 21 out of the country’s top 30 conglomerates have raised a combined 28.33 trillion won (US$25.74 billion) so far this year by selling bonds, with their net proceeds from the debt sales reaching 2.04 trillion won.
Their outstanding debts owed to bondholders reached 118.06 trillion won, up 2 percent from 116 trillion won at the end of last year, the data showed.
Conglomerates with mainstay business in construction, shipbuilding, steelmaking and petrochemicals have markedly rushed to the local debt market as their cash flows worsened amid global economic slowdown.
Shipbuilding conglomerate Hyundai Heavy Industries posted the largest increase in its outstanding debt at 3.38 trillion won, up 31 percent from 2.58 trillion won at the end of last year.
Daewoo Shipbuilding & Marine Engineering Co. saw its outstanding debt shoot up 15 percent to 1.52 trillion won over the cited period.
Major builder Daelim and top refiner SK Group each posted a 10 percent and a 11 percent rise as well, according to the data.
“Those conglomerates who have heavily sold debts were affected by increased working capital amid a business slump,” said Kim Sang-man, an analyst at Hana Daetoo Securities.
Local companies have tapped the capital market this year to refinance their maturing debts with those of lower interest as market rates have tumbled following rate reductions by the central bank.
South Korea’s central bank, the Bank of Korea, has cut its policy rate twice this year to a record low of 2 percent. For December, the central bank kept the rate at the current level.
The data also showed financially-troubled conglomerates such as Hanjin, Dongbu and Hyundai have reduced their outstanding debts owed to bondholders as they struggled to improve their balance sheets.
Top logistics conglomerate Hanjin Group’s outstanding debt was cut by 17 percent to 5.49 trillion won, and steelmaking conglomerate Dongbu Group has reduced its outstanding debts to 1.71 trillion won from 2.22 trillion won over the cited period.
Samsung’s outstanding debts to bondholders rose 2 percent to 8.6 trillion won, and top auto-making group Hyundai Automotive Group’s outstanding debts added 1 percent to 10.02 trillion won, according to the data. (Yonhap)
