South Korea's Hanwha Ocean Targets US Navy Orders as Trump Seeks Shipbuilding Ties

Steve SK Jeong, Head of Naval Ship International Business Department of Hanwha Ocean, speaks during an interview with Reuters in Seoul, South Korea, May 2, 2025.   REUTERS/Kim Hong-Ji
Steve SK Jeong, Head of Naval Ship International Business Department of Hanwha Ocean, speaks during an interview with Reuters in Seoul, South Korea, May 2, 2025. REUTERS/Kim Hong-Ji
TT

South Korea's Hanwha Ocean Targets US Navy Orders as Trump Seeks Shipbuilding Ties

Steve SK Jeong, Head of Naval Ship International Business Department of Hanwha Ocean, speaks during an interview with Reuters in Seoul, South Korea, May 2, 2025.   REUTERS/Kim Hong-Ji
Steve SK Jeong, Head of Naval Ship International Business Department of Hanwha Ocean, speaks during an interview with Reuters in Seoul, South Korea, May 2, 2025. REUTERS/Kim Hong-Ji

South Korean shipbuilder Hanwha Ocean aims to boost its revenue from overseas military vessels to around 4 trillion won ($2.91 billion) by 2030 and hopes to pick up more repair orders from the US Navy, a senior executive told Reuters.

The Asian country is a major global shipbuilder and trade talks with the US on tariffs brought up possible cooperation in the sector after US President Donald Trump signed an executive order to restore US shipbuilding.

Hanwha Ocean, formerly Daewoo Shipbuilding, is one of the largest shipbuilders in the world with an order book of $31.43 billion as of the end of March. It acquired a US shipyard in Philadelphia last year to expand in the market.

Its naval ships business, which has built dozens of submarines and surface vessels used by the South Korean Navy, has won two orders from the US Navy since last year to repair and overhaul its ships for the first time.

"I think we may be the biggest shipyard in the world that has taken on these maintenance, repair and overhaul orders from the US Navy," said Steve SK Jeong, head of the Naval Ship Global Business at Hanwha Ocean, days after US Secretary of the Navy John Phelan visited its shipyard.

"It is not very profitable, but learning the process of working with the US Navy is valuable, which will help if we win newbuild orders."

Hanwha Ocean hoped to win a double-digit number of US Navy maintenance and repair orders before 2030, Jeong said.

Trump has vowed to spend "a lot of money on shipbuilding" to restore US capacity, and cited concern over how his country has fallen behind in an industry that is also dominated by China.

Still, US laws can make it harder for foreign shipyards even if they have US operations. They are prohibited from building US Navy vessels, due to the Byrnes-Tollefson Amendment of the US Department of Defense Appropriations Act.

TRANSPLANTING PROCESSES

Hanwha Ocean's Philadelphia Shipyard is trying to get a license that clears it to build US Navy vessels, but transplanting cutting-edge manufacturing processes honed from competition with other South Korean and Chinese shipyards is not as simple as bringing in some automated welding machines, Jeong said.

"I think the US shipbuilding industry hasn't had to compete very much. Facilities are old, and there's a shortage of technicians," Jeong said.

"We are looking to modernize facilities, train and equip workers, and bring in our manufacturing process that can build the same ship in, I think, two-thirds the time or less as that of a US shipyard."

Jeong said the company is investing in South Korea to use existing facilities and expand naval ship capacity to build five submarines and three surface vessels at the same time by 2029, from two submarines and two surface vessels now.

Despite building 17 submarines for the South Korean Navy since 1987, Hanwha Ocean has only actively competed for overseas orders in the last few years as South Korea's low birthrate and shrinking military-age population risk cooling local demand.

It is competing to export submarines to Poland and Canada, a frigate to Thailand as well as knocking on the door in markets in the Middle East, South America, North Africa and Southeast Asia, to build up a sustained flow of orders that would bring foreign sales to 4 trillion won by 2030, Jeong said.

That would be about four times the size of its 1.05 trillion won of revenue in 2024.



Saudi Bonds: A Safe Haven in Emerging Markets

Riyadh (SPA)
Riyadh (SPA)
TT

Saudi Bonds: A Safe Haven in Emerging Markets

Riyadh (SPA)
Riyadh (SPA)

As global investors remain cautious about debt in emerging economies, Saudi Arabia is increasingly seen as a stable and attractive investment destination. This confidence stems from its strong financial foundation and ambitious economic transformation plans.

Karine Kheirallah, Head of Investment Strategy and Research for Europe, the Middle East, and Africa at State Street Global Advisors, one of the world’s largest asset managers, highlighted Saudi Arabia’s compelling macroeconomic story. She noted that while many countries struggle with high debt and rising servicing costs, Saudi Arabia maintains a relatively low debt-to-GDP ratio of 29.9% as of December 2024. Even with planned increases to support Vision 2030 investments, it is expected to remain well below global averages.

This fiscal discipline positions Saudi Arabia as a reliable sovereign bond issuer within emerging markets. Kheirallah expects the Kingdom to see steady economic growth in the coming years, led by structural reforms and non-oil sector investments. Though growth may not match the pace of some emerging markets, it is likely to outperform many advanced economies, making Saudi bonds appealing for investors seeking long-term value and stability.

In the first quarter of 2025, Saudi Arabia’s economy grew by 3.4% year-on-year, driven primarily by a 4.9% expansion in non-oil sectors, which contributed significantly to real GDP growth.

Vision 2030 plays a vital role in developing Saudi Arabia’s fixed-income market. Kheirallah explained that to finance major projects such as NEOM, both the government and the Public Investment Fund have expanded bond and sukuk issuances, including green financing. This has led to a more mature yield curve and improved price discovery across maturities.

The inclusion of Saudi dollar-denominated bonds in J.P. Morgan’s Emerging Markets Index in 2019 was a turning point, signaling global investor confidence. This move helped lay the groundwork for a more robust and sustainable debt market.

Saudi bonds also benefit from strong credit ratings. Moody’s upgraded Saudi Arabia to A1 in November 2024, and S&P raised its rating to A+ in March 2025. These reflect the country’s financial strength and effective reforms.

While public debt is rising, Kheirallah emphasized it remains manageable. However, sustaining fiscal health will depend on continued diversification and growing non-oil revenues. Maintaining high credit ratings, she stressed, will require ongoing financial discipline and successful reform implementation.