Shindonga Construction Files for Court Receivership... "Limited Impact on Credit Market"

Shindonga Construction, which applied for court receivership again five years after graduating from workout (corporate financial restructuring), is expected to have a limited impact on the credit market.

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On the 14th, iM Securities diagnosed this by comparing it with the case of Taeyoung Construction, stating that at the time of the workout, Taeyoung Construction was ranked 16th in construction capability, whereas Shindonga Construction is currently ranked 58th, indicating a limited status. Shindonga Construction filed for corporate rehabilitation procedures with the court on the 6th.

Researcher Kim Myung-sil explained, "Shindonga Construction mostly raised funds through bank loans or promissory notes," adding, "The proportion of Shindonga Construction in the second-tier financial sector's real estate project financing (PF) exposure is not large, so the spread of influence to other industries is limited."

However, she added, "Considering that the construction industry's downturn is intensifying, it is necessary to take into account that Shindonga Construction's recent court receivership application may have some negative impact within the industry."

Meanwhile, regarding the corporate bond demand forecast resumed this month, companies are evaluated to be raising funds steadily. Researcher Kim analyzed, "If there was a funding gap due to year-end outflows from bond-type funds, at the beginning of the year, a rebound effect has gathered funds, creating a favorable issuance market."

In particular, she said, "Issuance has been successful mainly with high-quality bonds such as POSCO and Daesang, and there is a high possibility that the favorable issuance market for high-quality bonds will expand to non-investment grade bonds," adding, "A demand-driven issuance market could lead to a strong secondary market."

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