Difficulty in financing and increased risk of default
The size of commercial paper (CP), which must be repaid within one year, exceeds 140 trillion won, and the size of corporate bonds maturing within this year is close to 100 trillion won. As major countries, including the United States, begin to raise interest rates intensively, concerns are being raised that difficulties in corporate financing will increase and the risk of default of marginal companies with low credit ratings will increase.
According to the financial investment industry and Koscom on the 9th, the size of commercial papers, short-term funds that mature within one year, amount to 20096.7 billion won, or 85% of the total remaining amount (233,381.8 billion won). Of these, the amount that matures within six months (180 days) stands at 49.5 trillion won. Commercial paper is a means of financing mainly used by companies with relatively difficult financing. Due to the short maturity, there is a risk of short-term repayment burden.
Corporate corporate bonds (excluding financial bonds), including asset-backed securities (ABS), with maturities returning to maturity by the end of this year were counted at 92.40 trillion won as of the 4th. The size of corporate bonds due to maturity is 92.804.1 billion won next year and 8.83 trillion won in 2024.
The size of corporate bonds and commercial papers that companies have to pay off by the end of the year alone has reached the level of 142 trillion won, and as market interest rates rise, it is becoming increasingly difficult to raise funds.
Se-woon Hwang, a senior research fellow at the Capital Market Research Institute, predicted, “If the Korean and US monetary authorities raise interest rates at the current rate, both businesses and households will find it difficult to sustain the interest burden beyond what they can afford.”
By Lee Kwan-beom, staff reporter frog72@munhwa.com
