A series of defaults and risks are reportedly emerging at business sites backed by loan guarantees from the Korea Housing & Finance Corporation (HF).

Some project financing (PF) guaranteed sites appear to be barely scraping by through multiple maturity extensions.

According to the details on business sites subject to business guarantee management submitted by the HF to Representative Park Sung-hoon of the People Power Party on the National Policy Committee today (30th), a total of 64 sites were tallied as management-targeted as of the end of August this year.

The HF’s management-targeted business sites refer to locations that executed loans backed by the corporation's guarantees, but where risk of default emerged during the project implementation process, prompting the corporation to place them under special management or handle them as defaulted cases.
 
The total guarantee balance for these sites stands at 3.8271 trillion won.

It was found that 57 sites, accounting for 89% of all management-targeted sites, have not yet been completed.

The guarantee balance for uncompleted management-targeted sites amounts to 3.5276 trillion won, reaching 92% of the total guarantee balance.

This means that since the projects have not been completed, the vast majority require continuous management depending on future construction progress, pre-sales, and financing conditions.

Among the HF's business guarantees, sites that received PF guarantees but extended their maturities more than once totaled about 100.

Among them, sites with remaining guarantee balances currently stand at 30, with the guarantee balance tallied at 1.4965 trillion won.

The site with the longest maturity extension is located in Garak-dong, Songpa-gu, Seoul, where its original maturity of June 2024 has been extended by seven years to June 2031.

There were 10 sites that repeatedly extended their maturities three or more times.

Among them, four sites extended their maturities five or more times.

In the case of a site located in Jangheung, Jeollanam-do, it was found that the maturity had been extended eight times.

The project's maturity has been cumulatively extended by 904 days, and a guarantee balance of approximately 2.88 billion won still remains.
Representative Park Sung-hoon emphasized, "While maturity extensions may be necessary due to project delays or temporary financing disruptions, repeated extensions must not become a means to postpone the management of troubled sites," adding, "We must re-examine the business viability of long-term and repeatedly extended sites to clear away potential risks."

He further added, "The government should not be overly eager to simply expand the scale of business guarantees, but should preemptively inspect the risk factors of sites under management."

(Photo courtesy of Korea Housing & Finance Corporation, Yonhap News)