Daishin Securities, Company Bond Demand Forecast Fully Undersubscribed

[Asia Economy Reporter Koh Hyung-kwang] Daishin Securities suffered a crushing defeat in the preliminary subscription conducted ahead of its corporate bond issuance. Analysts suggest that the loss of trust due to suspicions of incomplete sales of Lime Asset Management funds, which caused a large-scale redemption suspension incident, combined with the overall uncertainty surrounding the securities industry, led the market to shun the bonds.

According to industry sources on the 16th, Daishin Securities failed to secure a single investment demand in the demand forecast conducted the day before for a 100 billion KRW corporate bond issuance. The company is a securities firm with improving recent performance and an AA credit rating, so the market had expected a successful bond issuance. However, the result was a complete failure.

Daishin Securities, planning to issue corporate bonds on the 24th, had considered increasing the issuance by up to 150 billion KRW. However, with the entire issuance remaining unsold, a red light has been lit for the bond issuance. Following last year’s largest-ever issuance of 300 billion KRW in corporate bonds since its founding, Daishin Securities also raised funds by issuing 115 billion KRW in subordinated bonds in February this year. The market reaction was one of surprise. A securities industry official said, "It is a securities firm with an excellent credit rating, so it was somewhat surprising that it failed to attract investors."

The market interpreted this case as showing that investor sentiment toward securities firms has significantly frozen since the outbreak of the novel coronavirus disease (COVID-19). It was also interpreted that the fact that Daishin Securities heavily sold Lime Asset Management’s funds, which caused a large-scale redemption suspension incident, likely had a negative impact.

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