Hyundai Engineering and Construction HEC and Hyundai Merchant Marine HMM have had to secure additional short-term overdraft facilities from creditor banks in order to see off the threat of default on maturing bonds. The state-owned Korea Exchange Bank and other banks have agreed to lend an extra W350 billion $307 million to the two companies, which have been unable to roll over their bonds as investment trust corporations ITCs, the biggest buyers of corporate paper in South Korea, face massive mutual fund redemptions. The redemptions reflect concerns the ITCs are holding large amounts of bad debts and may have trouble honouring their committments.
The cashflow problems are confined to...
