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(Bloomberg) — Real estate market investments may cause trouble for South Korean securities firms, according to S&P Global Ratings, which revised its ratings outlook to negative for two companies on Friday.

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“Credit risks from overseas alternative investments are material,” the assessor said, shifting its view on both Mirae Asset Securities Co. Ltd and Korea Investment & Securities Co. Ltd. to negative from stable. “Domestic real estate project financing is adding to the strain.”

Fund managers in Seoul were among the biggest investors in European and US commercial buildings in recent years, and the property crisis in that sector has left them with assets whose values have plunged. On the home front, a debt restructuring at builder Taeyoung Engineering & Construction Co. left officials scrambling to prevent the repeat of the crisis caused by the default of a developer 18 months ago.

As of last year, securities firms’ exposure to overseas alternative investments was about 30% of their shareholders’ equity on average, S&P said. Most was in risky subordinated debt equity. For domestic real estate project financing guarantees and loans, the ratio was about 33%, it said.

The ratings agency said the Korean firms might need to make additional financial provisions. It affirmed its long-term BBB rating for both firms.

“Exposure to real estate project financing in Korea mainly takes the form of guarantees on short-term asset-backed commercial paper,” it said. “Companies could assume underlying credit and liquidity risks if these instruments are not rolled over.”

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