Tong Yang Group’s liquidity crisis is posing a new threat to mutual finance companies which hold a massive amount of bonds sold by the struggling business conglomerate

September 16, 2013 Leave a comment

Tong Yang’s liquidity crisis puts mutual finance at risk

By Lee Jin-myung

2013.09.16 14:39:50

Tong Yang Group’s liquidity crisis is posing a new threat to mutual finance companies which hold a massive amount of bonds sold by the struggling business conglomerate. South Korea’s financial authorities have already begun work to understand how much they are exposed to the risk, according to sources on Sunday. The Financial Supervisory Service estimates that 796.9 billion won ($736.3 million) corporate bonds issued by Tong Yang Group companies will mature after September and 30 to 40% of them are held by mutual cooperatives such as National Agricultural Cooperative Federation, or Nonghyup, and National Credit Union Federation of Korea, or Shinhyup. If Tong Yang Group fails to manage its situation and applies for court receivership, the mutual finance companies will not be allowed to continue claiming their credits, which will be an inevitable blow to their finance.
An official of the financial watchdog agency said 30 to 40% of troubled STX Group bonds are known to be owed by mutual finance companies and it would be the same level for the case of Tong Yang Group. Losses will have to be recognized at those mutual finance companies if Tong Yang Group ends in failure, the official said.

Filed under Investing Process

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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