[THE INVESTOR] A group of banks, led by KEB-Hana Bank, have offered a refund guarantee for a new order clinched by Hyundai Heavy Industries, industry sources said on Sept. 22.

Early last month, HHI, a major shipyard, won a deal from a Greek customer to build two oil tankers. But KEB-Hana Bank and other creditors, increasingly concerned about their credit exposure to the ailing shipbuilders in the country, were reluctant to offer refund guarantees for the order.

A refund guarantee issued by a shipyard’s bank is important for a ship owner when ordering a new vessel from a shipyard. If the shipyard defaults, the bank‘s refund guarantee provides the ship owner with the money already paid.

Without a refund guarantee, winning a new shipbuilding deal is almost impossible for a shipyard.

(theinvestor@heraldcorp.com)