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Taeyoung Construction Workout… Bank of Korea, “FSI Index Sharp Impact Unlikely”

NSP NEWS AGENCY, By Soon-ki Lee and Soo-in Kang, 2023-12-28 14:10 ENX7
#TaeyoungConstructio #Workout

(Seoul=NSP NEWS AGENCY) = Regarding Taeyoung Construction’s application for workout(corporate structure improvement work) due to the inability to revive its real estate project financing(PF) loans, the Bank of Korea said on the 28th, “It is not likely that the Taeyoung Construction case will have a drastic impact on the financial market.”

Taeyoung Construction’s PF loans are known to amount to approximately 3.2 trillion won. Taeyoung Construction is the parent company of Taeyoung Group, which owns the broadcasting company SBS. The company is supposed to build and sell apartments and officetels with the PF loan, but it has struggled to repay the loan as it has failed to start construction in many cases due to high interest rates and rising raw material costs.

With Taeyoung Construction, the 16th largest in the industry, filing for a workout, there are concerns that insolvency will begin in earnest for small and medium-sized construction companies and the financial industry that have been holding out for a while due to loan maturity.

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According to the BOK, loans to the real estate industry(+175.7 trillion won) and construction industry(+44.3 trillion won) have increased significantly since COVID-19, especially in the non-bank sector. Additionally, the PF loan delinquency rate soared from 1.19% at the end of last year to 2.42% at the end of September.

“So far, there is no significant increase in volatility that can be seen through price and volume indicators,” said the head of the BOK’s Financial Safety Division. “We believe that the likelihood of a sharp increase in the Financial Stability Index(FSI) due to Taeyoung Construction is practically not significant.”

He added, “There are criticisms that insolvency may have been delayed while operating the real estate PF lending group, but work is underway to liquidate PF business sites through the lending group with results.” “It is difficult to say that there is no effect of operating the lending group agreement.”

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