(Bloomberg) -- Korean builder Shinsegae Engineering & Construction Co. will raise 200 billion won ($149 million) from the sale of bonds as it seeks to shore up liquidity, just days after a competitor started debt restructuring. 

The company, part of a retail-focused conglomerate spun off by the Samsung Group, will sell the debt securities in a private placement. Financial institutions are set to buy 70% and a group company the remainder, according to a statement on Friday from the firm. 

Credit investors in South Korea are on high alert for signs of trouble after distressed builder Taeyoung Engineering & Construction Co. announced it couldn’t service its debts. That news rekindled memories of a default in 2022 by the developer of a Legoland theme park that sent short-term corporate borrowing costs to their highest in over a decade. 

Policymakers quickly moved to contain any contagion from the Taeyoung E&C fallout, pledging to step up a $66 billion program to stabilize markets if needed, with the country’s finance minister vowing authorities “will make every effort” to limit the spillover. 

At the heart of the nation’s property woes lie 134 trillion won worth of project finance loans, based on Bank of Korea data. These are typically shorter in maturity. Given the global rise in interest rates, in some cases they can be hard to refinance. 

Shares of the builder, which reported operating losses for four straight quarters, dropped 9.1%, their biggest slump since March 2021. Its local-currency note due in 2025 was little changed at 100.8% of par, according to data compiled by Bloomberg. 

Shinsegae Group was spun off from Samsung in 1997. Chair Lee Myung-hee is a daughter of the founder of the Samsung conglomerate. Among the builder’s projects is the Shinsegae Centum City department store in the southern city of Busan, billed as the world’s biggest. 

“We’ll monitor Shinsegae E&C’s liquidity at all times and actively consider various support measures, including group-level funding, if necessary,” parent Shinsegae Group said on its website.

Shinsegae E&C’s interest coverage ratio — a measure of a company’s ability to pay its obligations — was the weakest among major builders in the country as of the third quarter of 2023, according to a Korea Investment & Securities report this week. 

MoneyToday reported the news earlier on Friday. 

--With assistance from Shinhye Kang.

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