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S. Korean firms striving to secure capital amid economic woes
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South Korea's large firms are struggling to secure capital amid growing concerns
that the continuing debt problems in Europe and an economic slowdown may lead to
another liquidity shortage seen in the wake of the unprecedented financial
turbulence in 2008, data showed Thursday.
According to the data compiled by the Bank of Korea and the Financial Supervisory Service, the country's large firms have raised some 60 trillion won (US$54.6 billion) so far this year via sales of shares and debts, and loans from banks, almost matching last year's 64 trillion won in total. In 2009, they raised a total of 49 trillion won.
The data showed that outstanding loans extended to large firms stood at 106 trillion won as of the end of August, up 18 trillion won from the end of last year. The figure is larger than last year's increase of 12 trillion won in total.
They also raised 36 trillion won so far this year by selling debts in the first seven months of the year, compared with last year's 45 trillion won in total, the data showed.
"They (large firms) are raising capital on expectations that financing costs will continue to rise down the road on the economic slowdown," said an official at the financial watchdog.
Interests on loans extended to large firms averaged 5.98 percent as of end-July, compared with 5.52 percent at the end of last year. Also, the yield on three-year corporate bonds rated "AA-" rose to 4.48 percent from 4.17 percent over the cited period, the data showed.
"Large firms are forced to sell debts at higher costs, and they are expecting the costs to rise further amid economic uncertainties and unfavorable external conditions," said Kim Ki-myung, an analyst at Korea Investment & Securities.
South Korea's economy is facing a slowing growth pace as the global economy is showing signs of sputtering and the European region is facing sovereign debt problems.
Finance Minister Bahk Jae-wan said earlier that the government could revise down its growth outlook for this year, which currently stands at 4.5 percent, citing external economic headwinds. The country's central bank forecast that Asia's fourth-largest economy will grow 4.3 percent this year.
Korea's data on trade and industrial output already point to the slowing growth of the economy. The country's trade surplus shrunk to $821 million in August on record imports, and its industrial output grew at the slowest pace in 10 months in July.
But even in the face of slowing growth, Korea is facing high inflationary pressure at the same time due to a hike in public service charges, high oil and vegetable prices, and continued economic growth.
Consumer prices jumped 5.3 percent in August from a year earlier, quickening from 4.7 percent growth in July. Core inflation, which excludes volatile oil and food prices, rose 4 percent on-year in August, the sharpest gain in 28 months.
Date
2011.09.15
According to the data compiled by the Bank of Korea and the Financial Supervisory Service, the country's large firms have raised some 60 trillion won (US$54.6 billion) so far this year via sales of shares and debts, and loans from banks, almost matching last year's 64 trillion won in total. In 2009, they raised a total of 49 trillion won.
The data showed that outstanding loans extended to large firms stood at 106 trillion won as of the end of August, up 18 trillion won from the end of last year. The figure is larger than last year's increase of 12 trillion won in total.
They also raised 36 trillion won so far this year by selling debts in the first seven months of the year, compared with last year's 45 trillion won in total, the data showed.
"They (large firms) are raising capital on expectations that financing costs will continue to rise down the road on the economic slowdown," said an official at the financial watchdog.
Interests on loans extended to large firms averaged 5.98 percent as of end-July, compared with 5.52 percent at the end of last year. Also, the yield on three-year corporate bonds rated "AA-" rose to 4.48 percent from 4.17 percent over the cited period, the data showed.
"Large firms are forced to sell debts at higher costs, and they are expecting the costs to rise further amid economic uncertainties and unfavorable external conditions," said Kim Ki-myung, an analyst at Korea Investment & Securities.
South Korea's economy is facing a slowing growth pace as the global economy is showing signs of sputtering and the European region is facing sovereign debt problems.
Finance Minister Bahk Jae-wan said earlier that the government could revise down its growth outlook for this year, which currently stands at 4.5 percent, citing external economic headwinds. The country's central bank forecast that Asia's fourth-largest economy will grow 4.3 percent this year.
Korea's data on trade and industrial output already point to the slowing growth of the economy. The country's trade surplus shrunk to $821 million in August on record imports, and its industrial output grew at the slowest pace in 10 months in July.
But even in the face of slowing growth, Korea is facing high inflationary pressure at the same time due to a hike in public service charges, high oil and vegetable prices, and continued economic growth.
Consumer prices jumped 5.3 percent in August from a year earlier, quickening from 4.7 percent growth in July. Core inflation, which excludes volatile oil and food prices, rose 4 percent on-year in August, the sharpest gain in 28 months.
Source: Yonhap News (Sept. 15, 2011)