Corporate Direct Fundraising of 15.13 Trillion Won Last Month... 23.5% Decrease Compared to Previous Month

Stock Issuance Down 73.6%, Bond Issuance Down 17.6% Compared to Previous Month

[Asia Economy Reporter Minji Lee] Last month, the scale of direct financing by companies decreased. Both initial public offerings and paid-in capital increases declined, and corporate bond issuance also showed a notable decrease in financial bond issuance compared to the previous month. On the other hand, issuance of commercial paper (CP) and short-term bonds increased by 8.3% compared to the previous month.

According to the "Direct Financing Performance of Companies in August 2020" released by the Financial Supervisory Service on the 27th, companies raised a total of 15.1327 trillion KRW in the capital market last month. Compared to July, this is a decrease of 4.6428 trillion KRW (23.5%).

The amount of stocks issued by companies last month was 545.2 billion KRW (13 cases), down 1.5121 trillion KRW (73.6%) from the previous month (2.0664 trillion KRW, 21 cases). Both IPOs and paid-in capital increases significantly decreased.

All companies that went public last month were listed on the KOSDAQ market, issuing stocks worth 112.5 billion KRW (6 cases). Both the number of cases and the amount decreased by 129.8 billion KRW (53.6%) compared to the previous month. Companies such as Korea Pharma, Younglimwon Soft Lab, Cellex, and IDP participated in stock issuance.

Companies that conducted paid-in capital increases issued a total of 432.7 billion KRW (7 companies), down 76.3% from the previous month (1.8241 trillion KRW, 9 companies). The issuance scale significantly decreased due to the base effect from the large-scale issuance by Korean Air and CJ CGV last month for debt repayment purposes.

The amount of corporate bonds issued last month was 14.5875 trillion KRW, down 17.6% (3.1216 trillion KRW) from the previous month (17.7091 trillion KRW). Both financial bonds and general corporate bonds issuance decreased.

Corporate bonds issued through public offerings by general companies amounted to 1.58 trillion KRW (18 cases), down 54.3% (1.875 trillion KRW) compared to last year. Last month, companies continued to issue mainly medium- to long-term bonds for debt repayment purposes.

By rating, issuance was centered on bonds rated AA or higher. There was no issuance of bonds rated BBB or below last month; AAA-rated bonds were issued worth 500 billion KRW, AA-rated bonds 1.02 trillion KRW, and A-rated bonds 60 billion KRW.

Financial companies' financial bond issuance amounted to 11.0117 trillion KRW (178 cases), down 12.4% (1.5569 trillion KRW) from the previous month. Financial holding company bonds were issued at 1.2 trillion KRW (12 cases), down 11.1% from the previous month. Bank bonds were issued at 4.2 trillion KRW, down 5.8% from the previous month. Commercial banks issued 3.82 trillion KRW, and regional banks issued 200 billion KRW worth of bonds, decreasing by 1.2% and 50%, respectively, compared to the previous month. Other financial bonds were issued at 5.7917 trillion KRW, down 16.7% from the previous month.

At the end of last month, the outstanding balance of corporate bonds was 556.4784 trillion KRW, an increase of 3.8544 trillion KRW (0.7%) compared to the previous month. The net issuance trend of general corporate bonds was maintained, but the scale shrank compared to the previous month.

The issuance scale of commercial paper (CP) and short-term bonds, which companies issue for short-term funding, was 111.3733 trillion KRW, up 6.8% from the previous month. CP issuance was 32.4099 trillion KRW, an 8.3% increase from the previous month. Short-term bonds, including general short-term bonds and PF-AB short-term bonds, increased issuance, recording 78.4382 trillion KRW, up 6.1% from the previous month.