Last Year’s Corporate Direct Financing: Increase in Stocks and Corporate Bonds, Decrease in CP

[Asia Economy Reporter Park Jihwan] Last year, domestic companies increased stocks and corporate bonds while reducing the proportion of commercial papers (CP) and short-term bonds in their financing process.

According to the '2020 Corporate Direct Financing Performance' announced by the Financial Supervisory Service on the 27th, the issuance performance through public offerings of stocks and corporate bonds last year increased by 18.9833 trillion KRW from the previous year to 194.4832 trillion KRW, while the issuance performance of CP and short-term bonds decreased by 110.9924 trillion KRW to 1,401.0141 trillion KRW.

In the case of stocks, large initial public offerings (IPOs) and large-scale paid-in capital increases by listed companies continued, recording 10.9164 trillion KRW, an increase of 5.5992 trillion KRW compared to the previous year. IPOs increased by 1.3564 trillion KRW in one year, supported by a booming market. Major large-scale IPOs followed in succession, including SK Biopharm in June (652.3 billion KRW), Kakao Games in September (384 billion KRW), and Big Hit Entertainment in October (962.6 billion KRW).

Paid-in capital increases reached 7.0923 trillion KRW, an increase of 4.2428 trillion KRW from the previous year. This was due to an increase in companies raising large-scale funds in the KOSPI market for purposes such as debt repayment, expanding the issuance scale.

Corporate bonds also achieved 183.5668 trillion KRW, an increase of 13.3841 trillion KRW compared to the previous year. By type, general corporate bonds decreased by more than 3 trillion KRW to 42.055 trillion KRW across 410 cases.

On the other hand, financial bonds increased by 10.7566 trillion KRW during the same period to 120.0695 trillion KRW across 1,972 cases. Most issuances increased, including financial holding company bonds (82 cases, 11.49 trillion KRW), bank bonds (196 cases, 39.3911 trillion KRW), and other financial bonds (1,694 cases, 69.7784 trillion KRW).

CP recorded 371.592 trillion KRW, a decrease of 17.2518 trillion KRW compared to the previous year. Private placements accounted for most of it at 365.4386 trillion KRW. Short-term bonds amounted to 1,029.42221 trillion KRW, a decrease of 93.7406 trillion KRW. General short-term bonds decreased by 11.4% to 107.312 trillion KRW. PF-AB short-term bonds (short-term bonds issued based on PF loan claims) also decreased by 2.10854 trillion KRW. Other AB short-term bonds increased by 34.6568 trillion KRW.