Corporate Financing: Increase in Corporate Bond Issuance, Decrease in IPOs and Capital Increases

In the first half of this year, companies significantly increased their fundraising through corporate bond issuance. Fundraising through stock issuance such as initial public offerings (IPOs) and short-term financing using commercial paper (CP) and electronic short-term bonds sharply declined.

On the 24th, the Financial Supervisory Service announced in the '2023 First Half Corporate Direct Financing Performance' report that the total issuance of stocks and corporate bonds in the first half reached 124.537 trillion won, an 8.7% increase compared to the previous year.

The scale of corporate bond issuance totaled 121.8016 trillion won, an increase of 25.6864 trillion won (26.7%) compared to 96.1152 trillion won in the same period last year. For general corporate bonds, issuance amounted to 32.5034 trillion won (316 cases), up 10.9309 trillion won (50.7%) from 21.5725 trillion won (226 cases) in the previous year. The majority of corporate bond issuance was aimed at repaying borrowings.

Although conditions for corporate bond issuance have improved due to a decline in market interest rates, issuance amount and proportion of bonds rated A or below decreased by 258.1 billion won (9.6 percentage points) compared to the same period last year, reflecting the impact of market instability at the end of last year.

Financial bonds were issued at 81.7255 trillion won (1,180 cases), an increase of 13.9497 trillion won (20.6%) compared to 67.7758 trillion won (1,235 cases) in the previous year. In particular, the volume of bank bonds issued increased significantly due to rising funding demand. Asset-backed securities (ABS) issuance amounted to 7.5727 trillion won (478 cases), up 805.8 billion won (11.9%) during the same period.

On the other hand, stock issuance performance totaled 2.7354 trillion won (64 cases), a sharp decrease of 15.6833 trillion won (85.1%) compared to 18.4187 trillion won (75 cases) in the previous year.

IPOs amounted to 996.9 billion won (48 cases), a steep decline of 10.2577 trillion won (91.1%). All were listed on KOSDAQ, with no listings on the Korea Composite Stock Price Index (KOSPI). Paid-in capital increases totaled 1.7386 trillion won (16 cases), down 5.4255 trillion won (75.7%) from 7.1641 trillion won (27 cases) in the previous year. Due to sluggish stock markets, both the number and amount of issuances decreased in the KOSPI and KOSDAQ markets.

CP and short-term bond issuance amounted to 635.866 trillion won, a decrease of 206.0854 trillion won (24.5%).

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