January 18, 2000 
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| January 18, 2000 | atimes.com | |
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| The Koreas Daewoo bond redemption likely to surpass $20 billion SEOUL - The redemption of bonds issued by the Daewoo Group starting on February 8, when investors can redeem up to 95 percent of them, is expected to reach 23.5 trillion won ($20.85 billion), Hyundai Securities said on Monday. Despite huge funding support by the government and brokerage companies, the nation's leading investment and trust companies that are heavily exposed to Daewoo bonds are expected to come under pressure to sell their assets to secure liquidity, in order to meet the redemption call. When the government first announced the restriction on the redemption on August 31 last year, funds containing Daewoo bonds stood at 150.6 trillion won. The amount fell to 69.2 trillion won at the end of last year as a result of steady redemption, including 30 trillion won by individual and corporate investors and 51.4 trillion won by financial institutions. Funds outstanding at the end of last year included 32.3 trillion won held by individual and corporate investors and 37 trillion won by financial institutions. The 32.2 trillion won held by individual and corporate investors is up for the 95-percent redemption. Of that sum, bonds that will mature before February 8 amount to 23.5 trillion won and are expected to be redeemed in a short period of time. The short-term redemption amounting to 23.5 trillion won makes up 2.8 percent of total liquidity and represents 18.1 percent of the total beneficiary certificates of public and corporate bonds outstanding. If the redemption exceeds 23 trillion won in a short period of time, the additional funding requirement to meet the redemption call is estimated at 3 to 4 trillion won more than the 9.5 trillion won now held by investment and trust companies, and the 10 trillion won that the government has pledged to provide through the Korea Management Corp and Securities Finance. Investment and trust companies are likely to sell off stocks and bonds to meet most of the additional fund requirement, sources said. The redemption is expected to weigh heavily on the financial market but is unlikely to trigger turmoil because the government is determined to stabilize the market, Hyundai said. (Asia Pulse/Yonhap) | |||||||||
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