Up 200 Billion KRW Year-on-Year
KOSPI Issuance Decreases
SK and LG Effects Disappear
The issuance scale of stock-linked bonds by domestic KOSDAQ-listed companies this year increased by approximately 200 billion KRW compared to last year. The number of KOSDAQ companies issuing these bonds also rose significantly. In contrast, KOSPI-listed companies with sufficient fundraising capacity saw both the issuance scale and the number of companies decrease.
In particular, the scale of stock-linked bonds issued for debt repayment purposes doubled compared to last year. The company that issued the largest amount of stock-linked bonds was HYBE, which gained attention due to the 'Min Hee-jin incident.'
According to CEO Score, a corporate data research institute, "From January to October this year, 285 KOSPI and KOSDAQ-listed companies raised funds through stock-linked bonds such as exchangeable bonds (EB), convertible bonds (CB), and bonds with warrants (BW), which is 28 more companies than the same period last year," announced on the 30th.
The increase in issuance by KOSDAQ-listed companies was particularly notable. The number of KOSDAQ companies that raised funds was 245, an increase of 35 compared to the same period last year. The issuance scale also grew from 5.2182 trillion KRW last year to 5.4011 trillion KRW this year, an increase of 182.9 billion KRW.
The reason for the increase in stock-linked bond issuance by KOSDAQ-listed companies is due to the economic downturn and high interest rates, which have made fundraising difficult for small and medium-sized enterprises. These companies, which find it relatively difficult to secure funds, tended to raise capital through stock-linked bonds with lower interest rates.
KOSPI Slows Down
The issuance of stock-linked bonds by KOSPI-listed companies contracted. From January to October this year, 40 KOSPI companies issued bonds, seven fewer than last year, and the issuance scale decreased from 6.1184 trillion KRW to 1.8945 trillion KRW, a drop of 4.2239 trillion KRW.
This was influenced by SK and LG issuing stock-linked bonds worth over 2 trillion KRW each last year. SK Hynix and LG Chem issued EBs worth 2.2377 trillion KRW and 2.59 trillion KRW respectively, causing last year's KOSPI stock-linked bond issuance to unusually exceed 6 trillion KRW.
Due to the decrease in issuance scale by KOSPI-listed companies, the total issuance amount of stock-linked bonds by all domestic listed companies fell from 11.3366 trillion KRW last year to 7.2956 trillion KRW this year.
The use of funds raised through stock-linked bond issuance for debt repayment also increased this year. From January to October, the issuance amount of mezzanine bonds for debt repayment purposes was 1.8162 trillion KRW, a 93.6% increase compared to last year. Conversely, issuance for operating funds dropped by about half to 2.775 trillion KRW.
Due to the economic downturn, many companies are focusing more on debt repayment rather than new investments to improve financial soundness.
HYBE and Kakao Rank 1st and 2nd in Stock-Linked Bond Issuance
By company, HYBE recorded the largest scale by issuing 400 billion KRW worth of stock-linked bonds. HYBE issued 400 billion KRW worth of CBs on the 17th of this month to early redeem the 3rd series CB. Kakao ranked second by issuing 293 billion KRW worth of stock-linked bonds, some of which will be used to purchase AI-related graphics processing units (GPUs) and servers.
Kakao Games took third place by issuing 270 billion KRW worth of stock-linked bonds. In addition, several companies such as AST, MS Autotech, and Asiana Airlines issued stock-linked bonds of considerable scale.
Mezzanine bonds are financial products with a risk level between bonds and stocks. They include EB, CB, and BW. EB are bonds exchangeable for other stocks held by the issuing company, CB are bonds convertible into the issuing company's stock, and BW are bonds with rights to purchase new shares at a predetermined price.
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