State Bank Buying Hyundai Unit Debt

Korea Development Bank announced Tuesday plans to purchase 100 billion won ($78 million) of Hyundai Merchant Marine bonds. The bonds carry a yield of 10.72 percent.

A bank official said Hyundai Merchant Marine will issue the bonds, which mature in one year, Thursday through Korea Development Bank.

The government-owned bank will acquire all the bonds, which have a put option allowing the bank to demand repayment of the principal in six months.

"Hyundai's bonds are entitled to priority acquisition, but because there are no corporate bonds that mature right away, the bank is offering financial support by issuing new debt," the bank official said. He added that the 100 billion won will be used as operating cash flow to redeem Hyundai Marine notes held by other financial institutions

The bank said that between June and July 103 billion won of Hyundai notes are scheduled to mature.