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South Korean construction companies’ net borrowing has jumped 69.2 percent over the past three years, data showed Tuesday, pointing to growing risks of a liquidity crisis amid the country’s protracted slump in the property market.
The combined net borrowing of the 23 builders hit 18.1 trillion won ($16.3 billion) as of last September, compared with 10.7 trillion won by the end of 2009, according to the data compiled by the local financial industry and credit appraisers. Net borrowing refers to the difference between the amount a builder has borrowed and the amount it has in cash.
The 23 builders are rated higher than BBB rating by local credit rating agencies.
Meanwhile, net borrowing of builders, which are rated “BBB,” jumped to 6.2 trillion won from 2.9 trillion won during the cited period. Those companies rated BBB are considered “investment grade.”
The data also showed that short-term borrowing of mid-sized builders has increased in recent years in the latest sign that the builders’ financial health has deteriorated.
The ratio of short-term borrowing to net assets of nine mid-sized builders, including Doosan Engineering & Construction, stood at 68.8 percent as of last September, compared with 54.8 percent from a year earlier, according to the data. (Yonhap News)
The combined net borrowing of the 23 builders hit 18.1 trillion won ($16.3 billion) as of last September, compared with 10.7 trillion won by the end of 2009, according to the data compiled by the local financial industry and credit appraisers. Net borrowing refers to the difference between the amount a builder has borrowed and the amount it has in cash.
The 23 builders are rated higher than BBB rating by local credit rating agencies.
Meanwhile, net borrowing of builders, which are rated “BBB,” jumped to 6.2 trillion won from 2.9 trillion won during the cited period. Those companies rated BBB are considered “investment grade.”
The data also showed that short-term borrowing of mid-sized builders has increased in recent years in the latest sign that the builders’ financial health has deteriorated.
The ratio of short-term borrowing to net assets of nine mid-sized builders, including Doosan Engineering & Construction, stood at 68.8 percent as of last September, compared with 54.8 percent from a year earlier, according to the data. (Yonhap News)
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Articles by Korea Herald
