Shinhan's Presence in DCM... Solidifying into a 'Big 4' System?

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The market for underwriting general corporate bonds (SB) is experiencing a wave of change. The previously solid three-strong structure in the debt capital market (DCM) is showing cracks and shifting towards a 'Big 4' landscape.

According to the DCM league table based on SB as of the 8th, the rankings for January this year were: 1st NH Investment & Securities, 2nd Korea Investment & Securities, 3rd Shinhan Investment Corp., 4th KB Securities, and 5th SK Securities.

The underwriting amounts for these firms were recorded as 1,823.1 billion KRW (NH Investment & Securities), 1,781.9 billion KRW (Korea Investment & Securities), 1,704.7 billion KRW (Shinhan Investment Corp.), 1,642.7 billion KRW (KB Securities), and 1,546.6 billion KRW (SK Securities), respectively. Their market shares were 15.2% for 1st place, 14.8% for 2nd, 14.2% for 3rd, 13.7% for 4th, and 12.9% for 5th.

Notably, KB Securities dropped to 4th place while Shinhan Investment Corp. rose to 3rd. The existing three-strong system (NH-Korea Investment-KB) is showing cracks and transforming into a Big 4 (NH-Korea Investment-Shinhan-KB) structure.

Shinhan Investment Corp.'s advancement has been evident since last year. Their underwriting performance in 2023 was 6,441.9 billion KRW, a 96% surge compared to last year (3,275.0 billion KRW). This year’s trend remains positive as well. The 'January effect,' when institutional investors deploy funds early in the year, and growing expectations of interest rate cuts have contributed positively.

The total number of corporate bond issuances in January was 149, a 77.3% increase from 84 issuances in the same period last year. During the same period, the issuance volume jumped 87.4% from 6,615.0 billion KRW to 12,400.0 billion KRW. With improved investor sentiment, Shinhan Investment Corp.'s underwriting amount in January this year (1,704.7 billion KRW) increased by 33.6% compared to the same period last year (1,276.2 billion KRW).

Companies for which Shinhan Investment Corp. acted as lead underwriter in January include GS Energy, CJ ENM, Hyundai Construction, Hyundai Transys, E1, Hotel Lotte, HD Hyundai Heavy Industries, Shinsegae Food, Lotte Holdings, LG HelloVision, Hyundai Steel, SK Incheon Petrochem, Hanwha Solutions, KCC, and LG Uplus.

The background to Shinhan Investment Corp.'s progress in the DCM sector is attributed to CEO Kim Sang-tae’s strengthening of investment banking (IB). CEO Kim is a representative IB expert. He began his career at Daewoo Securities, known as the domestic capital market’s training ground, and has been recognized as an IB specialist for over 30 years. In 2022, he was appointed as co-CEO of Shinhan Investment Corp.'s Global Investment Banking (GIB) division upon recommendation from Shinhan Financial Group’s Subsidiary Management Committee.

Since CEO Kim’s appointment, the performance in traditional IB areas has significantly improved.

A financial investment industry insider said, "KB Securities has been considered a traditional powerhouse in the DCM sector, but Shinhan Investment Corp.'s recent progress is gaining attention within the industry. Demand in the DCM market is expected to improve compared to last year, so competition is likely to become more intense."

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