2024-01-11 02:30:00
(Seoul = Yonhap Infomax) Reporter Sangmin Han = Prior to the Taeyoung Construction workout, it was confirmed that securities company creditors had early reduced their related exposure through selldown (resale), etc.
The upcoming Project Financing (PF) short-term rollover volume appears to be responding to moral hazard issues raised in the market by switching to direct investment following the exercise trigger.
According to the investment banking (IB) industry on the 11th, Hyundai Motor Securities decided to directly acquire KRW 19 billion of ‘H Seun Jeilcha’ (A1 grade), a PF asset-backed electronic short-term bond (ABSTB) maturing on the 17th.
Due to Taeyoung Engineering & Construction’s credit rating being downgraded, an loss-of-terms (EOD) trigger was triggered according to the loan agreement. It was converted to direct investment through equity capital and chose not to roll over. Previously, credit rating agencies downgraded Taeyoung Construction’s credit rating from ‘A-‘ to ‘CCC’ on the 28th of last month due to Taeyoung Construction’s workout application.
H Sewoon First is included as a subordinated (tranche D) lender in the loan agreement with the borrower, Seun District 5 PFV. The construction company is Taeyoung Construction, and Hyundai Motor Securities has an obligation to underwrite privately placed bonds for the PF loan receivable.
Mirae Asset Securities also first sold down 20 billion won of the 30 billion won worth of ‘Golden Tiger First’ (A1) PF ABSTB to other financial institutions. Mirae Asset Securities is a subordinated (tranche D) bridge loan lender through a special purpose corporation (SPC) to the same Sewoon Reorganization Promotion Organization business site.
Mirae Asset Securities, which has an obligation to purchase loan receivables and privately placed bonds, appears to have purchased and acquired the remaining 10 billion won by suspending refinance issuance in October last year.
On the other hand, Mirae Asset Securities did not resell the ‘MA Shincheon Third’ (A1) PF ABSTB worth KRW 67 billion for which Taeyoung Engineering & Construction had committed to complete construction, and began to respond selectively.
If high-risk PF loans related to Taeyoung Construction circulate in the market, moral hazard issues may arise. This is because it may take several months to recover funds, and repayment may be difficult. Accordingly, securities companies are moving from a lending format to direct investment.
The securities industry also implemented sell-downs on PF loans one following another.
Last year, Shinhan Investment & Securities succeeded in selling down all 35 billion won of two tranche B (mid-priority) bridge loans to savings banks. These are Sewoon Space 2nd Loan (KRW 20 billion) and Sewoon Field 1st Loan (KRW 15 billion), which are the bridge loans of Sewoon District 5 PFV.
The timely sell-down is a notable factor. December 29 last year, the day following Taeyoung Construction’s workout application, was the rollover date for the PF loan, and refinance issuance was suspended. It appears that a preemptive sell-down was conducted prior to applying for a workout.
However, the amount in which Shinhan Investment & Securities participated as a middle priority (tranche C) still remains. Previously, the 20 billion won ‘Sewoon Space Tertiary’ (A1, 92-day note) issued at an interest rate of 4.6% in October last year will mature on the 18th.
It was confirmed that DB Financial Investment resold ‘Sewoon Space First’ PF ABSTB to an insurance company in July of that year in 2022.
An IB industry official said, “Securities companies are taking on SPC’s PF bond volume due to Taeyoung Construction’s workout decision trigger. If there is a possibility of repayment and business feasibility, they will take it, but if the possibility is small, they will sell it to a non-performing loan (NPL) company.” “We will be able to sell it,” he said.
Korea Development Bank reconvenes creditors of Taeyoung Construction today (Seoul = Yonhap News) Reporter Dong-jin Yoon = A briefing session for creditors regarding Taeyoung Construction’s consent to workout (improvement of corporate financial structure) was held at the headquarters of Korea Development Bank in Seoul on the morning of the 10th. A view of the Taeyoung Building headquarters in Seoul. It is reported that Taeyoung Group officials will attend the creditors’ briefing session on this day to explain additional self-rescue plans and ask for consent to the workout. 2024.1.10 [email protected]
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This article was published on the Infomax financial information terminal at 09:30, two hours earlier.
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