Korea's troubled firms, mostly shipbuilders and shippers, have faced rating downgrades amid their deepening financial woes and ongoing corporate overhaul efforts, industry sources said Tuesday.
According to Korea Ratings Corp., a total of 31 firms suffered a rating downgrade in the first half of the year, compared with 43 companies a year earlier.
But Daewoo Shipbuilding & Marine Engineering Co. and other shipbuilders, along with the country's major shipping lines such as Hanjin Shipping Co. saw their ratings take a downgrade.
For one, Hanjin Shipping, the country's top shipping line, was rated BB+ in March, but suffered a further downgrade to CCC in June. Its smaller local rival, Hyundai Merchant Marine Co., also suffered a sharp drop in its credit rating to D in April, from B+ in February, according to Korea Ratings.
Rating downgrades were also made for the country's major shipbuilders. Daewoo Shipbuilding suffered a drop in its rating to BB from BB+ in June, with ratings for Samsung Heavy Industries Co. and Hyundai Heavy Industries Co. cut by two notches and one notch, respectively, to A- and A.
"The overall outlook for the country's shipbuilding sector is negative, and further downgrades may be made if their slump continues," said Seo Kang-min, an analyst at Korea Ratings.
Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis which sent new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals.
The country's top three shipyards -- Hyundai Heavy Industries, Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. -- suffered a combined operating loss of 8.5 trillion won ($7.4 billion) last year due largely to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump, with the Daewoo Shipbuilding alone posting a 5.5 trillion won loss.
The shipbuilders have recently drawn up sweeping self-rescue programs worth 10.35 trillion won in their desperate bids to overcome a protracted slump and mounting losses.
Separately, local shippers are also placed under a tough restructuring drive as falling freight rates and a protracted slump squeezed their margins. (Yonhap)
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