Derivative-Linked Securities and Bonds Issuance Reached 96 Trillion Won Last Year: "Driven by Stock Market Recovery"

2025 Status of Derivative-Linked Securities and Bonds Issuance and Management
Growth Driven by Stock-Linked Products Such as ELS and ELB

Due to the recovery of global stock markets, the issuance volume of derivative-linked securities (DLS) and derivative-linked bonds (DLB), particularly those tied to stock indices or specific stock prices, has increased.

According to the Financial Supervisory Service's report, "2025 Status of Derivative-Linked Securities and Bonds Issuance and Management," released on May 6, the total amount issued last year reached 95.9 trillion won, an increase of 21.3 trillion won compared to the same period of the previous year.

Both derivative-linked securities and derivative-linked bonds saw an increase in issuance volume. During the same period, derivative-linked securities grew from 20.1 trillion won to 25.8 trillion won, while derivative-linked bonds surged from 53.5 trillion won to 69.1 trillion won. For derivative-linked securities, the issuance volume of index-linked equity-linked securities (ELS) alone increased by 5.7 trillion won. Regarding derivative-linked bonds, the issuance of equity-linked bonds (ELB) and other derivative-linked bonds (DLB) rose by 8.3 trillion won and 7.3 trillion won, respectively.

Securities firms were the most active purchasers of derivative-linked securities issued last year. By type of purchaser, securities firms accounted for 10.8 trillion won, banks for 7.8 trillion won, and asset management companies for 2.2 trillion won. In contrast, for derivative-linked bonds, retirement pension funds led with 31.4 trillion won, followed by securities firms with 16.9 trillion won, and banks with 10.8 trillion won.

For the underlying assets of derivative-linked securities, index-linked ELS accounted for 16.8 trillion won, stock-linked ELS for 3.7 trillion won, and hybrid ELS for 1.2 trillion won. Major indices such as the S&P500 and KOSPI200 were widely used for index-linked products, while stocks such as Tesla, Palantir, and Samsung Electronics were popular for stock-linked products. For DLS, the main underlying assets were credit (2.8 trillion won) and interest rates (300 billion won), with a strong preference for credit-based issuances.

Among derivative-linked bonds, ELBs were mainly issued based on stock-linked assets, while DLBs were issued primarily with interest rates as the underlying asset. The underlying assets for ELBs were 36.3 trillion won for stock-linked, 7.8 trillion won for index-linked, and 3.4 trillion won for hybrid products. Many stock-linked ELBs used domestic stocks such as Samsung Electronics and Korea Electric Power Corporation as their underlying assets. For DLBs, the underlying assets were 19.3 trillion won in interest rates and 1.9 trillion won in exchange rates.

On the 6th, when the KOSPI index surpassed the 7,000 mark intraday for the first time in history, the electronic board in the dealing room at Woori Bank's headquarters in Jung-gu, Seoul displayed the domestic stock market indices. May 6, 2026. Photo by Kang Jinhyung

For both derivative-linked securities and derivative-linked bonds, products with no-knock-in structures, where principal loss does not occur unless the underlying asset price drops below a certain level during the contract period, were more prevalent than knock-in structures. For derivative-linked securities, knock-in products amounted to 10.4 trillion won, while no-knock-in products totaled 15.4 trillion won. Most knock-in products (95.8%) were low-barrier products with barriers at or below 50%. All derivative-linked bonds were issued as no-knock-in products.

The total redemption amount for derivative-linked securities and derivative-linked bonds last year was 81.2 trillion won, a decrease of 5.1 trillion won compared to the previous year.

Redemptions of derivative-linked securities decreased, while those for derivative-linked bonds increased. The redemption amount for derivative-linked securities fell by 21 trillion won to 24.2 trillion won. This was due to the base effect following a large number of Hong Kong H-index ELS reaching maturity in 2024. In contrast, redemptions of derivative-linked bonds increased by 15.9 trillion won to 57 trillion won, in line with the rise in issuance volume.

The annual investment return rates for derivative-linked securities and derivative-linked bonds that were redeemed early or at maturity last year were 6.4% and 3.7%, respectively. By product type, ELS recorded an annual yield of 7.8%, DLS 2.1%, ELB 4.0%, and DLB 3.3%, indicating that products based on stocks as underlying assets produced higher returns. Notably, half (52.5%) of ELS products were in the 6-10% annual yield range, whereas half (52.4%) of DLS products were concentrated in the 2-4% range. For ELBs and DLBs, 74.5% and 71.1% of products, respectively, were in the 2-4% annual yield range.

Meanwhile, the outstanding balance of derivative-linked securities and derivative-linked bonds at the end of the year increased by 13.6 trillion won from the previous year, reaching 95.1 trillion won.

A Financial Supervisory Service official stated, "Investors should be aware that derivative-linked securities may incur principal losses, and although derivative-linked bonds are principal repayment products, they are not subject to the Depositor Protection Act." The official added, "The Financial Supervisory Service will continue to monitor the risk factors related to the issuance of derivative-linked securities and derivative-linked bonds and guide financial companies to provide thorough risk disclosure to investors."

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