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[THE INVESTOR] South Korea’s ailing shipbuilders and shippers have faced rating downgrades amid their deepening financial woes and ongoing creditor-led restructuring, industry sources said on July 5.
According to Korea Ratings, a total of 31 firms suffered a rating downgrade in the first half of the year, compared with 43 companies a year earlier.
They include Daewoo Shipbuilding & Marine Engineering and other shipbuilders, along with the country’s major shipping lines such as Hanjin Shipping saw their ratings take a downgrade.
Hanjin Shipping, the country’s top shipping line, was rated “BB+” in March, but suffered a further downgrade to “CCC” in June. Its smaller local rival, Hyundai Merchant Marine, also suffered a sharp drop in its credit rating to “D” in April, from “B+” in February, according to Korea Ratings.
Rating downgrades were also made for the country’s major shipbuilders. Daewoo Shipbuilding suffered a drop in its rating to “BB” from “BB+” in June, with ratings for Samsung Heavy Industries and Hyundai Heavy Industries cut by two notches and one notch, respectively, to “A-” and “A.”
“The overall outlook for the country’s shipbuilding sector is negative, and further downgrades may be made if their slump continues,” said Seo Kang-min, an analyst at Korea Ratings.
South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis which sent new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals.
The country’s top three shipyards -- Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering -- suffered a combined operating loss of 8.5 trillion won (US$7.4 billion) last year due largely to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump, with the Daewoo Shipbuilding alone posting a 5.5 trillion won loss.
The shipbuilders have recently drawn up sweeping self-rescue programs worth 10.35 trillion won in their desperate bids to overcome a protracted slump and mounting losses.
Separately, local shippers are also placed under a tough restructuring drive as falling freight rates and a protracted slump squeezed their margins.
(theinvestor@heraldcorp.com)
According to Korea Ratings, a total of 31 firms suffered a rating downgrade in the first half of the year, compared with 43 companies a year earlier.
They include Daewoo Shipbuilding & Marine Engineering and other shipbuilders, along with the country’s major shipping lines such as Hanjin Shipping saw their ratings take a downgrade.
Hanjin Shipping, the country’s top shipping line, was rated “BB+” in March, but suffered a further downgrade to “CCC” in June. Its smaller local rival, Hyundai Merchant Marine, also suffered a sharp drop in its credit rating to “D” in April, from “B+” in February, according to Korea Ratings.
Rating downgrades were also made for the country’s major shipbuilders. Daewoo Shipbuilding suffered a drop in its rating to “BB” from “BB+” in June, with ratings for Samsung Heavy Industries and Hyundai Heavy Industries cut by two notches and one notch, respectively, to “A-” and “A.”
“The overall outlook for the country’s shipbuilding sector is negative, and further downgrades may be made if their slump continues,” said Seo Kang-min, an analyst at Korea Ratings.
South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis which sent new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals.
The country’s top three shipyards -- Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering -- suffered a combined operating loss of 8.5 trillion won (US$7.4 billion) last year due largely to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump, with the Daewoo Shipbuilding alone posting a 5.5 trillion won loss.
The shipbuilders have recently drawn up sweeping self-rescue programs worth 10.35 trillion won in their desperate bids to overcome a protracted slump and mounting losses.
Separately, local shippers are also placed under a tough restructuring drive as falling freight rates and a protracted slump squeezed their margins.
(theinvestor@heraldcorp.com)
