Debt Looms for South Korean Shipyards
The top four Korean shipbuilders have 2.3 trillion won ($1.9 billion) in notes maturing next year, the most in Bloomberg-compiled data going back to 1997.
Bloomberg reports that some of them may have trouble paying debts without help from the government or group firms, according to HMC Investment Securities Co. and NH Investment & Securities Co.
Hanjin Shipping Co. sought bankruptcy protection this year and earnings suffered at Korea’s top shipyards including Hyundai Heavy Industries Co. and Hyundai Mipo Dockyard Co., amid a slump in oil prices and growing competition from China.
On October 31 this year, Korea’s Ministry of Strategy and Finance (MOSF) announced a plan to buttress the shipping and shipbuilding industries.
The government plans to spend almost $10 billion over the next three and a half years buying 250 new ships, and will create a fund to help shipping companies finance additional ships; the government has also said it will encourage shipping companies to reduce workforce and sell non-core assets to help them survive.
The challenges in the shipping industry highlight the trouble that a drop in global trade and lagging foreign demand pose to South Korea’s economy.
