The nation’s No. 2 shipping firm Hyundai Merchant Marine may move to increase its capital by issuing new stocks this year to overcome a prolonged liquidity problem.

The logistics company, in an inquiry disclosure earlier this week, denied that it has plans to recapitalize, saying it would issue 130.4 billion won ($118 million) in convertible bonds on the Singapore Exchange, officials said.

But considering the 200 billion won ($181 million) worth of corporate bonds that expire this month, it is widely expected that the cash-strapped shipper will have no choice but to issue new stocks or bonds to make up for its sales deficits.

This expectation grew when HMM revised internal rules last month, despite opposition from its second-largest shareholder, Hyundai Heavy Industries, to allow itself more discretion over the issuance of new stocks and bonds.

HMM faces estimated first-quarter operating losses this year of 55.9 billion won, according to securities information service provider FnGuide.

The company’s credit rating, too, was downgraded in February from “A” to “A-” on non-guaranteed bonds and from “A2” to “A2-” on corporate bills, according to the Korea Ratings Corporation.

By Bae Hyun-jung (tellme@heraldcorp.com)