To Secure Operating Funds in Advance
SK Hynix is planning to issue US$500 million in foreign currency bonds after raising more than 1.6 trillion won in Korea in the first half of 2002. The company is seeking to diversify financing channels in preparation for increased volatility in the financial market following the COVID-19 outbreak.
SK Hynix will issue the US dollar bonds in the fourth quarter of this year. The company has reportedly selected multiple companies including Citigroup Global Market Securities as lead managers.
SK Hynix issued 1.6 trillion won worth of corporate bonds in Korea in February. It was the largest bond issuance by a private Korean company. It also issued US$500 million in five-year dollar bonds in 2019. The move is seen as an attempt to secure operating funds in advance by diversifying funding channels.
Global investors are expected to show interest in SK Hynix’s bonds as the company performed well in the second quarter. In the first half of 2020, SK Hynix posted 8.61 trillion won in sales, up 20 percent from the previous half. Its operating profit rose 143 percent to 1,946.7 billion won. Analysts say that the company’s profitability improved on all products as overall prices spiked and the proportion of DRAM and NAND flash memories increased. In particular, an increase in teleconferences and media streaming due to the novel coronavirus spread has ignited an increase in server companies' investment as demand for data services has risen.
Global credit rating agency Moody's Investors Service has given SK Hynix a 'Baa2' credit rating. Moody’s expects SK Hynix’s financial conditions to improve this year as global semiconductor demand grows. But it graded the company’s rating outlook as ‘negative' considering the uncertainties in generating a continued surplus cash flow and reducing borrowings.