Bloomberg "Korean Corporate Bond Issuance to Hit Record High This Year"

As the corporate bond spreads (credit spreads) in the Korean bond market have fallen back to pre-Legoland incident levels, there is a forecast that the issuance of corporate bonds by Korean companies will reach an all-time high this year.

Bloomberg reported on the 8th (local time) that the amount of corporate bonds issued in Korea so far this year is around 31 trillion won, the highest compared to the same period in previous years. Companies such as SK Hynix and Korea Aerospace Industries (KAI) increased their corporate bond issuance earlier this month due to rising investment demand.

According to a Bloomberg survey, unlike the Bank of Korea's cautious stance on interest rate cuts, economists predict that the base interest rate will be lowered by 0.5 percentage points this year. The Bank of Korea began raising the base rate in 2021. Currently, it stands at 3.5% per annum, the highest level in 15 years. Companies with large loans face significant burdens.

However, with recent increases in exports and industrial production, investment sentiment is recovering. In particular, the government's liquidity support measures to resolve credit tightening in the real estate market have somewhat improved the credit issues of Taeyoung Construction, which entered workout, reassuring investors. Jeong Hyeong-ju, a credit analyst at KB Securities, which arranged the most corporate bond issuances in the first quarter of this year, said, "Although the real estate market situation has not improved, the government's active response to potential credit tightening has alleviated uncertainty."

As investment demand increased, the corporate bond credit spreads this month fell to the lowest level since early 2022. Many companies also sought to issue corporate bonds before the general election to avoid uncertainty. KB Securities expects that credit spreads could decrease further, maintaining a positive atmosphere through the second quarter, and unless major credit issues arise this year, corporate bond issuance is expected to set a record high.

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