ID :
96957
Sun, 12/27/2009 - 18:26
Auther :
Shortlink :
https://www.oananews.org//node/96957
The shortlink copeid
Debt risks rise in S. Korean conglomerates : think tank
SEOUL, Dec. 27 (Yonhap) -- More South Korean business conglomerates are facing dwindling cash flows this year, making it hard for them to make interest payments and creating potential instability in the nation's financial markets, a private researcher said Sunday.
LG Economic Research Institute said the interest coverage ratios at 12 of 41
conglomerates were smaller than 1 this year, meaning they won't generate enough
cash to meet their debt obligations, compared with seven such conglomerates last
year.
The interest coverage ratio measures a company's ability to make interest payments.
"Because a typical conglomerate consists of many affiliates throughout a web of
cross-shareholdings, a risk of failure at one affiliate could spread to another,"
the institute said in a report.
"But such risk could wane if the economy recovers," it added.
The institute did not, however, name the conglomerates suffering from growing
debt risks.
(END)
LG Economic Research Institute said the interest coverage ratios at 12 of 41
conglomerates were smaller than 1 this year, meaning they won't generate enough
cash to meet their debt obligations, compared with seven such conglomerates last
year.
The interest coverage ratio measures a company's ability to make interest payments.
"Because a typical conglomerate consists of many affiliates throughout a web of
cross-shareholdings, a risk of failure at one affiliate could spread to another,"
the institute said in a report.
"But such risk could wane if the economy recovers," it added.
The institute did not, however, name the conglomerates suffering from growing
debt risks.
(END)
