As the COVID-19 pandemic is expected to cause an economic contraction worldwide, South Korean conglomerates, the main locomotives of the nation’s economy, are increasingly borrowing money from banks in a bid to improve liquidity, according to data Tuesday.

The loan balance of Korean conglomerates at five banks -- KB Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank and NH Bank -- came in at 78.7 trillion won ($62.9 billion) as of Friday, up 1.78 trillion won from late February.

The increase in corporate loans from March 1 to 20 is double the monthly increase in February. It is also higher than the monthly corporate loan increase in January, standing at 1.74 trillion won.

Large companies here usually reduce the amount of their loans at the end of the year to strengthen their balance sheets, then increase loans again in the first month of the following year. Growth in business loans in March, therefore, is considered rare, according to market watchers.

“Conglomerates have been actually drawing money out of their line of credit accounts, which they had kept to maintain a certain level of liquidity,” an official from Woori Bank was quoted as saying by Yonhap News Agency.

Businesses in nearly all industries are trying to retain sufficient liquidity through line-of-credit products, according to a separate industry official.

Because of the virus wreaking havoc on the global economy, companies are scrambling to issue additional corporate bonds as investors try to build up their cash reserves instead of buying securities or bonds in the highly tumultuous market.

The value of corporate bonds scheduled to mature in April is 6.55 trillion won in value, the highest since related data began to be compiled in April 1991, according to the Korea Financial Investment Association, a self-regulatory organization. Bonds worth a total of 38.4 trillion won are slated to mature this year.

By Kim Young-won (wone0102@heraldcorp.com)