Corporate Bond Issuance Strengthens "Seol Holiday Is a Turning Point"

[Asia Economy Reporter Junho Hwang] It is forecasted that the strong trend in corporate bond issuance will continue until before the Lunar New Year holiday. Samsung Securities released a credit letter on the 7th presenting this outlook for the corporate bond issuance market.

At the beginning of the year, despite concerns over the resurgence of COVID-19, the demand forecast competition rate for corporate bond issuance exceeded last year's level. As a result, the issuance spread narrowed further, making the early-year corporate bond issuance market stronger than market expectations. Due to abundant liquidity in the market, the inflow of funds related to bonds intensified, and the corporate bond issuance market grew stronger as time passed last month.

The scale of corporate bond issuance this month is expected to be larger than last month. Typically, the volume of corporate bond issuance in February tends to increase compared to January. Companies that confirmed the strong corporate bond market sentiment last month are pushing forward with bond issuance to ride the bullish market. In particular, since interest rates are likely to rise in the second half of the year, many companies are expected to expedite their corporate bond financing. Accordingly, the issuance volume this month is expected to rise to a level similar to that of February last year.

Samsung Securities noted that although the corporate bond issuance market this year has been stronger than market expectations, raising concerns about fatigue from the continuous strong issuance market, the inflow of abundant market liquidity is expected to sustain the strong issuance market until the second week of February, when weekly issuance volumes are not large. Furthermore, after the Lunar New Year holiday, as the weekly demand forecast scale for corporate bonds increases, the strong issuance market is expected to slow down.

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