Corporate Bond Issuance Soars 42.2% Last Month... Outstanding Balance Reaches 587 Trillion Won

64% Decrease in Initial Public Offerings (IPO), Paid-in Capital Increase Also Declines
Rush in Corporate Bond Issuance...Operating Fund Procurement and Expansion of Non-Investment Grade Bonds

[Asia Economy Reporter Ji Yeon-jin] Last month, while corporate stock issuance decreased, fundraising through corporate bonds significantly increased. In particular, corporate bonds issued by financial institutions surged, seemingly due to an increase in companies raising operating funds through corporate bonds.

According to the 'Direct Financing Performance of Corporations in February' released by the Financial Supervisory Service on the 29th, stocks and corporate bonds worth approximately KRW 19.9666 trillion were issued, with stocks at KRW 684.6 billion, down KRW 1.2272 trillion (64.2%) compared to the previous month. Corporate bonds were issued at KRW 19.282 trillion, a sharp increase of KRW 5.7215 trillion (42.2%) from the previous month. At the end of last month, the total outstanding corporate bonds reached KRW 586.5312 trillion, up KRW 7.7026 trillion from the previous month (KRW 578.8286 trillion), marking an all-time high.

Stock issuance declined in both initial public offerings (IPOs) and paid-in capital increases by listed companies. There were only 8 IPOs (KRW 162.4 billion), and paid-in capital increases also dropped sharply to 4 cases (KRW 522.2 billion) from 6 cases (KRW 1.6222 trillion) in the previous month.

Regarding corporate bonds, issuance expanded mainly in non-investment grade bonds for general corporate bonds, and bank bonds and card bonds for financial bonds. Shinhan Bank issued about KRW 2.01 trillion, followed by Kookmin Bank (KRW 800 billion), KB Financial Group (KRW 690 billion), Samsung Securities (KRW 560 billion), and Shinhan Financial Group (KRW 410 billion). Additionally, LG Chem (KRW 1.2 trillion), Naver (KRW 700 billion), Uplus Five J50 Securitization SPC (KRW 411 billion), and SK E&S (KRW 500 billion) also raised large-scale funds through corporate bonds.

Corporate bonds were mainly issued as medium- to long-term bonds for debt repayment at maturity, but the proportion of operating funds increased notably by 20.6 percentage points last month. Also, with the full-scale public issuance of non-investment grade bonds, the share of bonds rated A or below rose by 22.7 percentage points compared to the previous month.

Asset-backed securities (ABS) totaled 46 cases worth KRW 684 billion, an increase of KRW 75 billion (12.3%) compared to the previous month (30 cases, KRW 609 billion).

The total issuance of commercial paper (CP) and short-term bonds was KRW 117.988 trillion, up KRW 8.9212 trillion from the previous month, with CP issuance at KRW 29.6529 trillion and short-term bonds at KRW 87.4459 trillion.

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