Last Month's Stock Issuance Up 75.6% Compared to Previous Month... "Increase in Paid-in Capital Increase"

In July, Stocks and Corporate Bonds Issued Totaling 19.7755 Trillion KRW... 1.4% Increase from Previous Month

[Asia Economy Reporter Minji Lee] Last month, the number of companies raising funds in the capital market through initial public offerings (IPOs), rights offerings, and corporate bond issuances increased compared to the previous month. This was largely influenced by some large corporations conducting large-scale rights offerings for debt repayment purposes.

According to the "Direct Financing Performance of Companies in July 2020" released by the Financial Supervisory Service on the 26th, companies raised a total of 19.7755 trillion KRW in the capital market last month. This is an increase of 264.9 billion KRW (1.4%) compared to June.

The amount of stocks issued by companies last month was 2.0664 trillion KRW (21 cases), an increase of 889.7 billion KRW (75.6%) compared to the previous month (1.1767 trillion KRW, 12 cases). Although the scale of IPOs decreased, the performance of rights offerings increased significantly.

All companies that went public were listed on the KOSDAQ market, issuing stocks worth 242.3 billion KRW (12 companies). While the number of cases increased compared to the previous month (9 cases, 779.8 billion KRW), the issuance scale decreased by 537.5 billion KRW. This is interpreted as a base effect due to SK Biopharm issuing stocks worth 652.3 billion KRW when it was listed on the KOSPI market the previous month.

Companies that conducted rights offerings issued a total of 1.8241 trillion KRW (9 companies), an increase of 359.6% (1.4727 trillion KRW) compared to the previous month (3 companies, 396.9 billion KRW). The large-scale rights offerings by Korean Air (1.027 trillion KRW) and CJ CGV (220.9 billion KRW) for debt repayment and other purposes had a significant impact.

The scale of corporate bond issuance last month was 17.7091 trillion KRW, a decrease of 3.4% (524.8 billion KRW) compared to the previous month (18.3339 trillion KRW). Although financial bond issuance increased, the overall issuance amount decreased due to a decline in general corporate bonds and asset-backed securities (ABS) issuance.

Corporate bonds issued through public offerings by general companies amounted to 3.455 trillion KRW (40 cases), down 43.8% (2.688 trillion KRW) from the previous month (6.143 trillion KRW, 64 cases). Last month, companies increased mid- to long-term bond issuance for debt repayment purposes, issuing 1.9857 trillion KRW for refinancing funds.

By credit rating, issuance of BBB-rated bonds increased significantly. Last month, BBB-rated bonds were issued at 380 billion KRW (4 cases), up 46.2% from the previous month (260 billion KRW). Conversely, AAA (400 billion KRW) and AA (1.65 trillion KRW) rated bonds decreased by 74% and 45%, respectively, compared to the previous month. As a result, the issuance proportion of bonds rated A or below increased by 14.8 percentage points compared to the previous month.

Financial companies issued financial bonds worth 12.5686 trillion KRW (196 cases), a 27.1% decrease compared to the previous month (9.892 trillion KRW, 170 cases). Financial holding company bonds and bank bonds increased by 33.7% and 80.1%, respectively, compared to the previous month. Among other financial bonds, credit card companies (down 17.8%) and securities companies (down 19.7%) reduced issuance, while installment finance companies (capital) and other financial companies increased corporate bond issuance by 20.1% and 1466.7%, respectively.

At the end of last month, the outstanding balance of corporate bonds was 552.6243 trillion KRW, an increase of 1.2% (6.3363 trillion KRW) compared to the previous month (546.228 trillion KRW). Although the net issuance trend was maintained, the scale shrank to 888 billion KRW from 3.536 trillion KRW in the previous month.

The issuance scale of commercial papers (CP) and short-term bonds, which companies issue for short-term financing, was 104.3383 trillion KRW, down 4.3% (4.2547 trillion KRW) compared to the previous month (100.0791 trillion KRW). CP issuance totaled 30.4099 trillion KRW, up 21.1% from the previous month (25.1133 trillion KRW). Short-term bonds recorded 73.9329 trillion KRW, a 1.4% decrease from the previous month due to a decline in general short-term bond issuance.

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