May Stock and Corporate Bond Fundraising Up 40%... Is the Rebound Starting?

[Asia Economy Reporter Eunmo Koo] In April, as the economic downturn caused by the novel coronavirus infection (COVID-19) intensified, the performance of direct financing procurement by domestic companies sharply declined, but it began to rebound again last month.

According to the Financial Supervisory Service on the 29th, the total issuance performance of stocks and corporate bonds issued by companies through public offerings in May was 16.0718 trillion KRW (stocks 172.4 billion KRW, corporate bonds 15.8994 trillion KRW), an increase of 4.5999 trillion KRW compared to April.

First, stock issuance recorded 172.4 billion KRW, up 123.8 billion KRW (254.7%) from April (48.6 billion KRW), as both initial public offerings (IPOs) and paid-in capital increases rose. In April, there were no IPOs, but two IPOs were conducted, including Ebest SPAC No.5 and Dream CIS, increasing by 27.2 billion KRW.

Paid-in capital increases also showed results for both listed and unlisted companies, expanding by 96.6 billion KRW (198.8%) compared to the previous month (48.6 billion KRW) to 145.2 billion KRW. KR Motors, listed on the KOSPI, raised 26 billion KRW, Simtek, listed on KOSDAQ, raised 61.9 billion KRW, and unlisted company DB Metal also raised 57.3 billion KRW.

The scale of corporate bond issuance also increased to 15.8994 trillion KRW, up 4.4761 trillion KRW (39.2%) from April (11.4233 trillion KRW). Issuance expanded across general corporate bonds, financial bonds, and asset-backed securities (ABS). Hana Financial Group issued the largest amount at 800 billion KRW, followed by Hyundai Card (630 billion KRW), Hyundai Commercial (620 billion KRW), Hyundai Motor Company (600 billion KRW), and KB Financial Group (600 billion KRW).

General corporate bonds continued to be issued mainly as medium- to long-term bonds for debt repayment purposes. The issuance scale of general corporate bonds was 4.917 trillion KRW (47 cases), an increase of 697 billion KRW (16.5%) compared to the previous month (4.220 trillion KRW). Notably, the proportion of bonds with a credit rating of 'A' or higher increased by 13.5 percentage points compared to the previous month.

Financial bonds were issued in 154 cases, raising 8.304 trillion KRW. This is an increase of 2.473 trillion KRW (42.4%) compared to the previous month (5.831 trillion KRW). During this period, financial holding company bonds increased by 1.48 trillion KRW (97.4%) to 2.08 trillion KRW, bank bonds expanded by 100 billion KRW (232.2%) to 950 billion KRW, and other financial bonds increased by 893 billion KRW (20.4%) to 5.274 trillion KRW.

ABS issuance amounted to 2.6784 trillion KRW (120 cases), an increase of 1.3061 trillion KRW (95.2%) compared to April (1.3723 trillion KRW). Primary collateralized bond obligations (P-CBO) issuance rose sharply by 880.6 billion KRW (287.0%) from the previous month (306.8 billion KRW) to 1.1874 trillion KRW.

The outstanding balance of corporate bonds as of the end of May was 539.4986 trillion KRW, expanding by 5.4787 trillion KRW (1.0%) compared to the previous month. Both general corporate bonds, financial bonds, and ABS saw issuance amounts exceed redemption amounts, turning into net issuance.

Commercial paper (CP) and short-term bond issuance totaled 94.9949 trillion KRW, a decrease of 5.8774 trillion KRW (5.8%) compared to April. CP issuance was 25.663 trillion KRW, up 1.8485 trillion KRW (7.8%) from April, but short-term bonds decreased by 7.259 trillion KRW (10.0%) to 69.3319 trillion KRW.

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