SK Ecoplant Issues 400 Billion Won Corporate Bonds in Three Months... Accelerating Fundraising [fnMarketWatch]

[Financial News] SK Ecoplant is tightening its grip on fundraising by issuing corporate bonds worth a total of 400 billion won in three months.     
According to the financial investment industry on the 29th, SK Ecoplant issued 100 billion won worth of private bonds on the 27th to secure refinancing funds. The bonds have a maturity of two years with a coupon rate of 4.0% per annum. In February, the company issued a total of 300 billion won worth of 1-2 year corporate bonds in the public bond market. The coupon rate was set at 4.0% to 4.6% per annum.
The reason SK Ecoplant is engaging in large-scale fundraising within three months is that the maturity of corporate bonds due in the second half alone amounts to 432 billion won. Considering that the previous corporate bonds had a coupon rate of mostly 5-6% per annum, it can be said that the company has succeeded in reducing interest costs this year. 
It is not just corporate bonds. Short-term funding is also significant. SK Ecoplant's commercial paper (CP) issuance balance is 413 billion won, and the balance of electronic short-term bonds is 70 billion won, totaling 483.5 billion won. There is criticism that the borrowing structure is short as all maturities are less than one year. 
SK Ecoplant's credit rating is A- with a stable outlook. It is one notch above the BBB+ rating. The credit rating industry has evaluated that SK Ecoplant's rapidly increasing borrowings are a burden on its creditworthiness. 
Kim Woong, a researcher at NICE Credit Rating, said, "SK Ecoplant's net borrowings are showing a rapid increase," adding, "The scale of borrowings is excessive compared to profit-generating capacity." SK Ecoplant's net borrowings surged from 1.1317 trillion won at the end of 2020 to 5.1437 trillion won at the end of September last year.  
In addition, the increase in project financing (PF) contingent liabilities is also a burden. Kim explained, "Recently, the scale of credit support related to private development projects is increasing in the form of capital replenishment," adding, "There is uncertainty about the recovery of construction bonds and risks related to self-funding as some sites with responsibility for completion obligations maintain low sales rates." However, he added that the possibility of direct and indirect support from the SK Group acts as a factor mitigating financial risk.
Meanwhile, SK Ecoplant is a comprehensive construction company ranked 9th in construction capability evaluation last year, engaging in domestic and overseas chemical and power plant construction, civil engineering, and housing construction. Recently, business diversification is underway through active investment expansion in environmental and fuel cells and the incorporation of affiliates engaged in the semiconductor business. SK holds 62.15% of the company's shares. 
khj91@fnnews.com Kim Hyun-jung Reporter