Corporate bill default rate plunges

Following the liquidation of a group of nonviable companies, Korea¡¯s default rate of commercial bills plunged to 0.27 percent in December last year, 0.36 of a percentage point down from the 0.63 percent reported in the previous month. But the figure is still more than twice as high as the 0.14 percent recorded in December1999.

Particularly, the number of bankrupt companies among locally based firms increased by 54 from November to total 434 in December. Reflecting the difficult situation of the local economy, their default rate reached 0.34 percent.

The Bank of Korea said Friday that the overall default rate tumbled thanks to a decrease in the amount of dishonored corporate bills by large conglomerates such as Daewoo Motor, Dong-Ah Construction Industrial and the Korea Express. But the financial crunch plaguing local firms has yet to be eased, officials said.

By region, the bill default rate was the highest in Inchon with 0.86 percent, followed by Taegu with 0.44 percent and Pusan with 0.27 percent. Kwangju also posted a default rate of 0.27 percent, higher than the 0.25 percent in Seoul.

Meanwhile, last December, 2,910 companies were newly inaugurated, a rise of 84 from the previous month and increasing the ratio of business startups against bankrupt companies to 10.1 percent from 9.8 percent a month earlier.