Hyundai Heavy Industries is considering issuing a minimum of 1 trillion won in domestic bonds in a bid to secure cash amid the industry's prolonged downturn.
"Hyundai Heavy needs to improve cash flow because of few ship orders," a credit analyst told The Korea Times, Monday.
Its cash and cash-equivalent assets dropped to 2.26 trillion won at the end of December last year from 4.14 trillion three months earlier, according to the company.
Hyundai will hold an investor relations session targeting bond market participants and credit analysts March 27, according to sources.
Hyundai Heavy spokesmen declined to comment.
"Still, our cash flow is stable. But more measures are needed to secure additional cash helped by our good credit rating," an official at Hyundai Heavy said, asking not to be identified.
Hyundai, the world's biggest shipyard, earlier predicted a 23-percent drop in orders this year, forecasting that falling demand amid the global downturn may cause its orders to fall to $21.2 billion in 2009.
To partly tackle its weakening cash flow, Hyundai only plans to spend 1.43 trillion won in 2009 to build a new yard and buy shipbuilding-related equipment.
Analysts and industry watchers say the plan doesn't necessarily mean Hyundai has been suffering from cash shortages, but the plan reflects how bad the global shipbuilding market is.
Shipyards in Korea, the world's largest shipbuilding nation, had received record orders over the past few years on rising shipbuilding demand.
But the situation has taken a sudden turn for the worse.
As the deepening global recession and falling trade have directly dampened the shipbuilding and shipping industries, new ship orders have evaporated this year, causing top shipbuilders to suffer order delays, or even cancellations.
"Due to no new orders, shipbuilders' cash holdings are decreasing. Hyundai's plan seems understandable. But it might face cash shortages unless new orders are received," said an analyst at Woori Investment.
Like Hyundai, other Korean shipbuilders are busy looking to secure cash by issuing corporate bonds.
Last week, Samsung Heavy Industries, the world's No. 3 shipyard, clarified it will sell $482 million in three-year local bonds ? its first corporate bond offering since 2002 ? to prepare for any future crisis.
Samsung, which sold 700 billion won worth of commercial paper last month, has won a single shipbuilding order valued at $680 million in the first two months of the year.
It also saw its cash and cash-equivalent assets drop to two trillion won recently from 3.37 trillion won at the end of September.
Daewoo Shipbuilding & Marine Engineering (DSME), the world's second-biggest in the industry, will also sell 500 billion won worth of corporate bonds April 1 for operational costs, the company said.
"Financing is just a process that doesn't go beyond the scope of protecting pride. Stronger measures need to be implemented," said the Shipbuilders' Association of Japan.
"Cash holdings by shipbuilders will steadily decrease throughout the year as there are no immediate signs of an economic turnaround. It is highly unlikely their cash reserves will see a major improvement anytime soon," said an analyst at Samsung Securities.
Despite a series of rate cuts by the central bank, yields for corporate bonds with higher credit risks remain at a high level.
But a continued liquidity supply helped drive down the returns of company bonds and commercial papers, easing worries over a credit squeeze.
"Hyundai Heavy needs to improve cash flow because of few ship orders," a credit analyst told The Korea Times, Monday.
Its cash and cash-equivalent assets dropped to 2.26 trillion won at the end of December last year from 4.14 trillion three months earlier, according to the company.
Hyundai will hold an investor relations session targeting bond market participants and credit analysts March 27, according to sources.
Hyundai Heavy spokesmen declined to comment.
"Still, our cash flow is stable. But more measures are needed to secure additional cash helped by our good credit rating," an official at Hyundai Heavy said, asking not to be identified.
Hyundai, the world's biggest shipyard, earlier predicted a 23-percent drop in orders this year, forecasting that falling demand amid the global downturn may cause its orders to fall to $21.2 billion in 2009.
To partly tackle its weakening cash flow, Hyundai only plans to spend 1.43 trillion won in 2009 to build a new yard and buy shipbuilding-related equipment.
Analysts and industry watchers say the plan doesn't necessarily mean Hyundai has been suffering from cash shortages, but the plan reflects how bad the global shipbuilding market is.
Shipyards in Korea, the world's largest shipbuilding nation, had received record orders over the past few years on rising shipbuilding demand.
But the situation has taken a sudden turn for the worse.
As the deepening global recession and falling trade have directly dampened the shipbuilding and shipping industries, new ship orders have evaporated this year, causing top shipbuilders to suffer order delays, or even cancellations.
"Due to no new orders, shipbuilders' cash holdings are decreasing. Hyundai's plan seems understandable. But it might face cash shortages unless new orders are received," said an analyst at Woori Investment.
Like Hyundai, other Korean shipbuilders are busy looking to secure cash by issuing corporate bonds.
Last week, Samsung Heavy Industries, the world's No. 3 shipyard, clarified it will sell $482 million in three-year local bonds ? its first corporate bond offering since 2002 ? to prepare for any future crisis.
Samsung, which sold 700 billion won worth of commercial paper last month, has won a single shipbuilding order valued at $680 million in the first two months of the year.
It also saw its cash and cash-equivalent assets drop to two trillion won recently from 3.37 trillion won at the end of September.
Daewoo Shipbuilding & Marine Engineering (DSME), the world's second-biggest in the industry, will also sell 500 billion won worth of corporate bonds April 1 for operational costs, the company said.
"Financing is just a process that doesn't go beyond the scope of protecting pride. Stronger measures need to be implemented," said the Shipbuilders' Association of Japan.
"Cash holdings by shipbuilders will steadily decrease throughout the year as there are no immediate signs of an economic turnaround. It is highly unlikely their cash reserves will see a major improvement anytime soon," said an analyst at Samsung Securities.
Despite a series of rate cuts by the central bank, yields for corporate bonds with higher credit risks remain at a high level.
But a continued liquidity supply helped drive down the returns of company bonds and commercial papers, easing worries over a credit squeeze.