Homeplus, CP and Flyers 194 Billion KRW... Investors Fear Hundreds of Billions in Losses

Homeplus has entered corporate rehabilitation proceedings due to a liquidity crisis, raising concerns that investors who purchased commercial papers (CP) and electronic short-term bonds may face losses amounting to hundreds of billions of won.

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According to the Securities Information Portal of the Korea Securities Depository on the 5th, the outstanding balance of Homeplus's CP and electronic short-term bonds is estimated at 194 billion won as of the previous day. The outstanding balance of CP is 116 billion won, and electronic short-term bonds amount to 78 billion won. This represents 0.069% of the total outstanding balance of CP and electronic short-term bonds, which stands at 280.8141 trillion won. In particular, the proportion of outstanding balances issued by companies with a credit rating of 'A3-'?the rating Homeplus held when it filed for corporate rehabilitation?is about 0.13%.

Since Homeplus holds a small share in the short-term funding market, the securities industry expects the impact of this rehabilitation proceeding on the corporate bond market to be limited. However, the financial investment sector raises the possibility that investors who purchased CP and electronic short-term bonds may incur losses. The previously issued CP and electronic short-term bonds appear to have been sold to retail investors through securities firms. The amount maturing this month is 29.5 billion won. Subsequently, maturities of 40.5 billion won in April, 50 billion won in May, 42 billion won in June, and 12 billion won in August are expected.

Meanwhile, criticism has arisen as it was revealed that Homeplus issued CP worth 5 billion won and electronic short-term bonds worth 2 billion won on the 21st of last month, just before filing for corporate rehabilitation.

Earlier, credit rating agencies downgraded Homeplus's CP and electronic short-term bond credit ratings from 'A3' to 'A3-' last month, citing weakened profit-generating capacity, excessive financial burden relative to cash flow, and increased uncertainty about mid- to long-term business competitiveness. Subsequently, Homeplus filed for corporate rehabilitation on the 4th of this month and received a commencement decision from the court. Reflecting the court's decision, credit rating agencies further downgraded Homeplus's credit rating to 'D'.

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