Last month, the scale of corporate bond issuance increased by nearly 4 trillion won (US$2.98 billion) compared to the previous month. This surge was primarily driven by a significant increase in financial institution-issued bonds despite a decrease in the issuance of general corporate bonds. On the other hand, stock issuance saw a slight decline during the same period.
According to the report “Direct Corporate Financing Performance for August 2023” released by the Financial Supervisory Service on Sept. 21, corporate bond issuance last month amounted to 19.23 trillion won, marking a 24.6 percent increase compared to July and a growth of 3.8 trillion won.
The issuance of general corporate bonds dropped by 81.9 percent to 490 billion won compared to the previous month, impacted by factors such as interest rate hikes. However, financial bonds issued by financial institutions saw a whopping 47.3 percent increase during the same period, reaching 17.96 trillion won. Shinhan Bank with 2.83 trillion won, Kookmin Bank with 2.17 trillion won, Hana Bank with 1.32 trillion won, and Woori Bank with 650 billion won were the primary issuers of bank bonds.
Asset-backed securities (ABS) stood at 777.2 billion won, showing a 45.8 percent rise compared to July. At the end of August, the total outstanding corporate bond balance reached 628.47 trillion won, representing a 0.6 percent increase compared to the previous month. The issuance of general corporate bonds did not surpass the redemption amount in August, continuing the trend of net redemptions.
On the other hand, stock issuance decreased by 11.7 percent to 566.8 billion won compared to the previous month. This decline was attributed to a decrease in the size of rights offerings, which went from seven cases totaling 386.4 billion won in July to five cases amounting to 182.4 billion won in August, despite an increase in initial public offerings.
Meanwhile, the issuance of corporate commercial paper (CP) in August amounted to 32.2 trillion won, marking an 8.3 percent decrease compared to the previous month. Short-term bond issuance, on the other hand, reached 63.05 trillion won, showing a 7.1 percent increase during the same period.