SK Hynix Inc. has decided to issue 500 billion won (US$437.64 million) worth of corporate bonds. This is part of the company’s plans to pay back its corporate bonds which will mature in May and secure operation funds.
SK Hynix is considering issuing 180 billion won (US$157.55 million) worth of 3-year bonds, 200 billion won (US$175.05 million) worth of 5-year bonds, 50 billion won (US$43.76 million) worth of 7-year bonds and 70 billion won (US$61.27 million) worth of 10-year bonds. Mirae Asset Daewoo Co. and SK Securities Co. will manage the issuance.
SK Hynix is planning to use the funds for repayment of its corporate bonds. The company has 450 billion won (US$393.87 million) worth of corporate bonds which will mature at the end of May. Out of the 500 billion won (US$437.64 million), it will spend 450 billion won (US$393.87 million) on paying back the bonds that come due and the rest on facility investment and operation expenses. SK Hynix raised funds by issuing a total of 640 billion won (US$560.18 million) worth of public bonds last year.
The company’s bond issue is expected to attract a large amount of capital in light of its stable performance and the ongoing boom in the corporate bond market amid low interest rates. The company posted 40.32 trillion won (US$35.30 billion) in sales and 20.58 trillion won (US$18.01 billion) in operating profit last year. Its debts amounted to 5.28 trillion won (US$4.62 billion), which was lower than its cashable assets of 8.37 trillion won (US$7.33 billion). SK Hynix saw its credit rating go up a notch from AA- to AA0 in May last year. This was largely due to the improvement in performance on the semiconductor market boom last year.
However, there are growing concerns over the credit rating as the semiconductor market has been slowing down from the beginning of this year. Credit rating agencies are still not considering downgrading the credit rating of SK Hynix’s corporate bonds. But, they will consider a downgrade when the company’s profits shrink at a fast face due to the fall in semiconductor prices and its cash continues to drain amid massive facility investments.