Impact of COVID-19 Continues... April Corporate Bond Issuance Down 27% Compared to Previous Month

April Corporate Direct Financing Performance Down 28% MoM
Only General Corporate Bond Market Increased 60% Compared to March

[Asia Economy Reporter Minji Lee] Last month, due to the impact of the novel coronavirus infection (COVID-19), the number of companies raising funds in the capital market through corporate bond issuance, initial public offerings, and paid-in capital increases decreased compared to the previous month.

According to the 'Direct Financing Performance of Companies in April 2020' announced by the Financial Supervisory Service on the 28th, companies raised a total of 11.4719 trillion KRW in the capital market last month. This is a decrease of 4.6436 trillion KRW (28%) compared to March, the previous month.

The scale of corporate bond issuance last month was 11.4233 trillion KRW, down 4.223 trillion KRW (27%) from the previous month (15.6463 trillion KRW). Although general companies increased their corporate bond issuance, the overall issuance amount decreased due to a decline in financial bonds and ABS issuance.

Corporate bonds issued through public offerings by general companies amounted to 4.22 trillion KRW, an increase of 60.2% compared to 2.634 trillion KRW in the previous month. This was because companies increased issuance mainly of medium- to long-term bonds for the purpose of funding and maturity debt repayment. During the month, general companies issued 2.9 trillion KRW of corporate bonds for debt repayment purposes.

Financial companies' financial bond issuance performance was 5.831 trillion KRW, down 48% from 11.2239 trillion KRW in the previous month. Credit card companies, holding companies, and securities firms increased their bond issuance scale, but banks and installment finance companies (capital) reduced their issuance scale by 88.2% and 18.6%, respectively.

Last month, the corporate bond market shifted to net issuance as general corporate bond issuance increased. In March, there was a net redemption of 546 billion KRW, but last month there was a net issuance of 66 billion KRW. This means that in March, companies repaid more money than they borrowed, whereas last month, they borrowed more by issuing bonds.

The scale of commercial paper (CP) and short-term bonds issued for short-term financing was 100.8723 trillion KRW, down 24% from 133.2178 trillion KRW in the previous month. Among these, asset-backed commercial paper (ABCP) issued based on project financing (PF) loan receivables amounted to 60.1 billion KRW, a 70% decrease compared to the previous month. Instead, PF asset-backed short-term bonds amounted to 4.6814 trillion KRW, an increase of about 16% compared to the previous month.

The amount of stocks issued by companies last month was 48.6 billion KRW, a 90% decrease compared to the previous month. This was because no companies went public last month, and no companies listed on the KOSPI market conducted paid-in capital increases. Among KOSDAQ-listed companies, 'Inno Instrument' and 'Ilya' issued stocks worth 34.3 billion KRW and 14.3 billion KRW, respectively.

This content was produced with the assistance of AI translation services.