South Korea is trying to calm markets as the construction company seeks to restructure its debt

SEOUL: Taeyoung Engineering & Construction, a mid-sized South Korean construction company, said on Thursday (Dec 28) that it plans to restructure its debts, and authorities quickly said they were working to ensure the problems do not continue spill over into the financial markets.

The country's 16th largest construction company has 4.58 trillion won ($3.6 billion) in debt, including project finance loans, accounting for less than 1 percent of assets held by local financial institutions, the Financial Services Commission said in a statement Explanation.

“We see limited impact on financial markets as the issue was already known and the market situation is stable, but the government plans to significantly strengthen emergency measures to ensure that negative sentiment does not lead to increased volatility,” it said.

Emergency measures include government loan guarantees for Taeyoung's project financing loans.

To curb inflation, the country's central bank has raised interest rates by a total of 300 basis points since 2021, causing a downturn in the real estate market.

Taeyoung's shares closed down 3.7 percent on Thursday, a loss of 43 percent since the start of the year.

The company's net profit fell by a quarter to 49.1 billion won ($38 million) in 2022.