New Task Force to Evaluate Credit Default Risk

A new task force will evaluate credit default risks and present guidelines to determine the fates of builders and small and mid-size shipbuilders. Hence a corporate restructuring campaign led by the government will likely begin, targeting construction companies and shipbuilders.

Financial Supervisory Service Chairman Kim Jong-chang told reporters yesterday, "The government will establish a task force comprising representatives from commercial banks, public accounting companies and credit rating agencies to conduct speedy industrial restructuring of builders and small and medium-size shipbuilders."

"The task force will be established immediately Wednesday and set standards and specific procedures for credit assessment by industrial sector by year’s end. It will begin industrial restructuring, including specific credit assessments, from early next year."

The financial watchdog said debt rescheduling agreements centered on main creditor banks and the "fast track" financial aid program for smaller companies have limits in industrial restructuring, so it presented guidelines on determining which companies must go.

“Based on the standards and procedures prepared by the task force, the main creditor bank will conduct credit default risk assessment of a company, and thus set the direction for the company’s corporate restructuring," Kim said.

"Initially companies suffering from a liquidity shortage and those expected to see a worsening managerial situation will be subject to the assessment."

Also subject to the assessment are builders that signed up for creditor bank-led debt rescheduling agreements and small or medium-size shipbuilders under the fast track arrangement.

jaeyuna@donga.com