Corporate Bond Issue in South Korea Decreased in H1

The Financial Supervisory Service announced on July 28 that the amount of stocks and corporate bonds issued based on public offering in South Korea totaled 60.9537 trillion won in the first half of this year, down 7.3% from a year ago.

Corporate bonds accounted for 57.3894 trillion won, most of which were general corporate bonds. The amount decreased by 9.6% year on year. KB Financial Holdings took up 1.1 trillion won, followed by SK (800 billion won) and Lotte Chemical (760 billion won).

General corporate bonds with a rating of at least AA represented more than 80% of the total while those with a rating of BBB or less increased from 635 billion won to 1.3879 trillion won. It seems that demands for the bonds with lower credit ratings increased based on the news that the South Korean government would take action to stabilize the corporate bond market.

In the meantime, stock-based financing for the first half of 2016 totaled 3.5643 trillion won to show a year-on-year growth of 59%. Initial public offering showed a substantial increase, led by major KOSDAQ companies such as ST Pharm and Rayence. KOSPI companies’ paid-in capital increase contributed to the growth as well, including those of Samsung Engineering (1.2651 trillion won) and BNK Financial Group (472.5 billion won).

 The commercial paper and asset backed short-term bond issue increased 9% to 680.5859 trillion won. Specifically, the former decreased 13.1% to 152.2733 trillion won whereas the latter increased 17.6% to 528.3126 trillion won.