Money Remains
Corporate bonds issued by leading Korean companies are still appealing to investors, although their sentiment has deteriorated as of late.
According to industry sources, a total of 460 billion won (US$537 million) was attracted on Sept. 7 to the demand forecasting regarding the 300 billion won (US$252 million) of three and five-year corporate bonds to be issued by Samsung SDI. The five-year ones, which are estimated to record a bond issue amount of 100 billion won (US$84 million), drew 200 billion won (US$168 million), while the three-year ones attracted 260 billion won (US$218 million), 60 billion won (US$50 million) more than the amount scheduled. The coupon rate of the three-year bond exceeds the market rate by 5 bps, and that of the five-year one is equal to the market rate.
Medical capsule manufacturer Suheung, which is planning to issue 60 billion won (US$50 million) of two and three-year bonds on Sept. 10, recently created a demand of more than 125 billion won (US$105 million), too. A high institutional demand allowed the coupon rates to be fixed at 2.377 and 2.661 percent, 1.7 bps and 8.3 bps lower than the market rates, respectively.
“These days, the domestic corporate bond market is showing a tendency of polarization, that is, those companies showing a solid performance or a bright outlook are gaining popularity, whereas the others are shunned regardless of their credit ratings,” said KDB Daewoo Securities Analyst Lee Kyung-rok.
He added that Samsung SDI, which has a credit rating of AA, succeeded in winning over investors as a gilt associated with the Samsung Group, and by means of its business portfolio expansion from small secondary battery manufacturing to electronic materials and chemical. “Suheung, whose credit rating is relatively low at A-, appealed to investors by dint of its high share and excellent performance in the medical capsule market,” he continued. According to the Financial Supervisory Service, Suheung’s share in the hard capsule market amounts to 95 percent now, and it recorded an operating profit ratio of 11.8 percent in the first half of this year.