Hanshin Gongyeong "No Liquidity Issues... 'Pohang Hanshin The Hue Pentacity' Sales Progressing Smoothly"

'Pohang Hanshin The Hue Pentacity' Perspective / Provided by Hanshin Engineering & Construction

[Asia Economy Reporter Noh Kyung-jo] Hanshin Engineering & Construction stated on the 4th that the recent trading of the company's bonds at an annual interest rate of 65% was an unusual case occurring between individuals. They emphasized that the sales of their own project, 'Pohang Hanshin The Hue Pentacity,' which consists of over 2,000 households, are progressing smoothly.

On the 1st, some of Hanshin Engineering & Construction's 42nd public offering corporate bonds were traded at an annual interest rate of 65%. The bond's coupon rate is 3.78% per annum, and the average market rate (average evaluation rate by private bond rating agencies) is 5.801% per annum. This rate is only 0.02% of the 100 billion KRW corporate bonds issued in March last year, and Hanshin Engineering & Construction explained that it was a sudden transaction between individuals.

They also reported that the bond's yield to maturity (YTM) was lower than the BBB average yield of the same credit rating. Bond prices and interest rates (yields) move inversely; when bond prices fall and interest rates rise, it is considered that the risk of default on the bond increases.

The 3-month maturity yield of Hanshin Engineering & Construction's corporate bonds was evaluated at 5.45%, which is 42 basis points (1bp = 0.01 percentage points) lower than the 5.87% yield to maturity of BBB-rated corporate bonds with the same maturity disclosed by the private bond rating agency NICE P&I. This indicates that the market relatively assesses Hanshin Engineering & Construction's risk as low.

They also stated that liquidity is not an issue. Hanshin Engineering & Construction is known to have accumulated cash through its own sales projects during the recent real estate boom over the past several years. In 2018, cash and cash equivalents were around 150 billion KRW, but as of the end of the first half of this year, they recorded cash holdings of 401 billion KRW. The current ratio also stood at 159% at the end of the first half.

Hanshin Engineering & Construction said, "Regarding the Pohang Hanshin The Hue Pentacity project, which consists of 2,192 households and had concerns about unsold units due to the sluggish sales market, we have secured interim payment loans from Kookmin Bank and NongHyup Bank."

This content was produced with the assistance of AI translation services.