A growing number of small and medium-sized companies in Korea are facing a shortage of operating cash in the midst of the economic slowdown and more stringent loan conditions, data showed Sunday.

Cash and cash equivalents at 612 listed companies reached 52.2 trillion won (46.8 billion) as of the end of September down 3.39 percent from December of 2010, according to the Korea Exchange.

Due to the eurozone fiscal crisis and deepening concerns about a global economic slowdown, local lenders are reluctant to extend their loans to small enterprises. Cash-strapped firms also find it hard to tap into alternate sources such as the issuance of corporate bonds and paid-in capital increase.

The majority of companies which struggle with shrinking cash reserves belong to the SME category. Of the 42 listed firms whose cash and cash equivalents plunged more than 80 percent during the cited period, only three firms ― GS, Shinsegae, LG Fashion ― belong to the large corporation group.

By industry, marine transportation, construction and shipbuilding companies were hit the hardest.

Six marine transportation firms saw their cash reserve drop 36 percent to 1.8 trillion won during the period. The figure for the 36 listed builders slid 23.1 percent to 5 trillion won. Six shipbuilders also saw their cash shrink 6.3 percent, with STX Offshore & Shipbuilding dragging down the sector with a 43.2 percent decrease.

While SMEs are in search of elusive cash, the country’s major conglomerates continue to borrow from local lenders relatively easily. As of end-November, the outstanding bank loans extended to large firms stood at 125.4 trillion won, up 26.6 percent from a year earlier. During the same period, the outstanding bank loans to SMEs edged up 3.2 percent to 462.9 trillion won.

Corporate bond issuances are also declining for small firms with lower credit ratings. Corporate bonds issued to firms with the speculative grade of “BB+” stood at 118.8 billion won in 2011, down 38 percent from the previous year. The issuance to companies with the grade of “BBB-” fell 36 percent to 155 billion won during the same period.

Adding to the liquidity problem, the amount of corporate debt maturing this year is estimated at 30.7 trillion won, 16 percent of which is held by companies with “BBB+” or lower grades. Given the debt market sentiment, only blue chip companies are expected to get their debt refunded.

By Yang Sung- jin (insight@heraldcorp.com)