South Korea

South Korean carmaker Ssangyong Motor has filed for bankruptcy after failing to repay creditors, a move analysts said signals that the government is unlikely to bail out pandemic-hit companies that have foreign backers, the Financial Times reported. Ssangyong, 75 per cent-owned by Indian automaker Mahindra & Mahindra, has filed for court receivership and warned of massive disruptions to its operations after defaulting on loan payments of about Won60bn ($54.4m).

Automaker Mahindra & Mahindra’s South Korean unit Ssangyong Motor Co has defaulted on loan repayment of about 60 billion won ($55 million), the Indian company said in a statement to the stock exchange on Tuesday, Reuters reported. Of the total payment that was due on Dec. 14, about 30 billion won was owed to Bank of America, 20 billion won to JP Morgan Chase and 10 billion won to BNP Paribas, Mahindra said. Shares of the Indian automaker fell as much as 1.5% on Tuesday to their lowest since Nov. 23, while those of Ssangyong fell up to 7.72%.

South Korean household borrowing from banks and brokerages grew at record pace in November fueled by retail investors borrowing to buy stocks in a bull market that stands 90% higher than lows struck in March, Reuters reported. Bank lending to households for mortgages, stocks and living expenses in November was up by 13.6 trillion won ($12.54 billion) from October, in another big monthly rise that added to record levels of household debt despite fresh curbs on loans introduced by regulators last month.

Asiana Airline's lead creditor bank called for backing for Korean Air's takeover of the debt-ridden Korean carrier on Thursday in the face of opposition to the plan from some shareholders, Reuters reported. Activist fund KCGI, which is the largest shareholder of Korean Air's parent company Hanjin Kal, said it had filed for a court injunction to prevent it issuing new shares to state-run Korea Development Bank (KDB).

Korean Air Lines Co Ltd plans to spend 1.8 trillion won ($1.62 billion) to become the top shareholder of indebted Asiana Airlines Inc, in aviation's first major consolidation since COVID-19 brought the industry to its knees, Reuters reported. It will also be the biggest shake-up in South Korean air travel since Asiana’s founding ahead of the 1988 Seoul Olympics, with the airline eventually integrated into Korean Air to create a national carrier commanding about 60% of international routes.

Large conglomerates are rapidly restructuring their businesses in an effort to help cushion the negative impact caused by the prolonged COVID-19 pandemic, The Korea Times reported. As corporations are struggling with looming challenges from the global recession induced by the virus pandemic, they are selling not only cash-strapped units but also cash-generative businesses to secure liquidity. The Fair Trade Commission (FTC) said mergers and acquisitions (M&As) rose sharply in the first half of this year compared with the same period in 2019.

Eastar Jet Co. on Tuesday began the process to find a new owner after Jeju Air Co. scrapped its plan to acquire the smaller budget carrier amid the new coronavirus' impact on the airline industry, YonhapNews reported. Eastar Jet has selected Deloitte Anjin LLC, Yulchon LLC and Heungkuk Securities Co. as lead managers to handle the deal to sell its controlling 51.17 percent stake, Eastar Jet Senior Vice President Kim You-sang said over the phone.

South Korea’s Hyundai Development Co said on Tuesday it wants new terms for its acquisition of Asiana Airlines after the carrier’s already hefty debt burden increased by some $3.8 billion (2.9 billion pounds), Reuters reported. It also called on Asiana’s state-funded creditors to provide support to the long-troubled airline, which must now also contend with the coronavirus pandemic’s crippling impact on travel demand. Hyundai Development and brokerage Mirae Asset Daewoo agreed in December to purchase control of South Korea’s No. 2 airline for about 2.5 trillion won ($2.1 billion).

South Korean bank stocks have gone from cheap to extremely cheap in a matter of months as concerns grow over their loan books tied to the nation’s flagging property sector, Bloomberg News reported. The MSCI Korea Financials Index, in which banks carry a 65% weighting, is trading at 0.34 times its members’ book value, down from about 0.5 times at the end of 2019, according to Bloomberg-compiled data.

South Korean president Moon Jae-in has warned that the economic crisis stemming from coronavirus is only just beginning as he unveiled a sharp increase in spending to deal with the fallout of the pandemic to almost $200bn, the Financial Times reported. The new measures highlight the long-term economic challenge for countries even after they have dealt with the immediate public health crisis. “We are at the beginning stage of a crisis. A hiring freeze together with a corporate crisis is looming,” said Mr Moon.