Sales of high-grade corporate bonds in South Korea hit an over three-year low in the third quarter of last year amid growing concerns over earnings by shipbuilders, carmakers and steel producers, data showed Sunday.

The net issuance of bonds with a credit rating of AA or higher plunged to 800 billion won (US$679 million) in the July-September period from 3.6 trillion won three months earlier, according to the data by the Bank of Korea and the Korea Securities Depository.

It was the lowest level since the second quarter of 2012, when bonds worth a net 1.8 trillion won were paid back.

Companies with a credit rating of A and lower paid off more bonds than they floated last year.

Their net redemption rose to 1.2 trillion won in the second quarter from 700 billion won three months earlier.

Market watchers attributed the drop in the issuance of high-grade bonds to escalating default risks stemming from the sluggish growth of Asia's fourth-largest economy.

Also responsible was growing concerns over losses by major companies following a revelation that Daewoo Shipbuilding & Marine Engineering Co., a major shipyard, has been hemorrhaging due to stumbling overseas projects, they added.

Daewoo Shipbuilding logged operating losses of 4.5 trillion won in the first three quarters due to a delay in the construction of offshore facilities and order cancellations, raising concerns that it may face a liquidity shortage. (Yonhap)