Net external debt of state firms hits record high in Q2

SEOUL, Aug. 24 (Yonhap) -- The net external debt of South Korean state-run firms
rose to a record high in the second quarter as they sold a large amount of
overseas bonds amid easing global financial turmoil, data by the central bank
showed Monday.

State firms owed US$10.24 billion more than the value of their assets held
overseas as of the end of June, up 26.3 percent from the previous year, according
to the Bank of Korea (BOK). It marked the first time that the figure surpassed
$10 billion mark.
The rise was attributed mainly to increased bond floating amid abating global
financial jitters. The companies' foreign debt stood at $11.1 billion as of
end-June, up 23.9 percent from a year earlier, the BOK added.
Since June, Korean state-run companies have issued a large amount of overseas
bonds to raise foreign currency funds. They sold debts worth of $3.39 billion in
June and July alone, with total bond issuance by such firms reaching $4.05
billion in the first seven months of this year, according to the BOK.
Korean banks and companies earlier faced difficulty in borrowing from overseas,
as the collapse of Lehman Brothers last September dried up credit, making it
difficult for them to service foreign debt. The Korean won tumbled 25.7 percent
against the U.S. dollar last year alone amid concerns over dollar shortages.
But the local currency has advanced about 26 percent to the greenback since early
March when the won fell to an 11-year low of 1,570.3 on the back of a widening
trade surplus and a foreign buying spree of Seoul stocks.
"Overseas debt sales by state-run companies themselves have a limited impact on
the currency market as most of them are using currency hedges," said Jeon
Seung-ji, a currency analyst at Samsung Futures Inc. "But because a rise in bond
sales would help foreign exchange money markets improve, this could put an upward
pressure on the won indirectly."
sooyeon@yna.co.kr
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