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BLOOMBERG
South Korea is again in damage control mode, seeking to contain fallout from a construction firm’s debt woes that risk replicating replicating a recent credit crunch.
In the cross-hairs this time is Taeyoung Engineering & Construction, which shocked markets late last month with a request to reschedule payment terms for project financing loans.
These securities were also the source of two earlier episodes of stress, including one triggered by the default of the developer of the Legoland theme park in 2022 that snowballed into the worst meltdown in the country’s credit market since the global financial crisis.
The proposal of Taeyoung, whose projects include a baseball stadium, amusement parks and buildings in Seoul, caused a selloff in bank and developer stocks. Its won-denominated bond due in July plunged to about 62% of its par value from 97% on December 26, according to Bloomberg-compiled data.
Investors’ unease came even as Korean officials pledged to step up a $66 billion program to stabilise markets if needed, with the country’s finance minister vowing authorities “will make every effort” to limit the spillover.