S.Korea's corporate bond sale posts double-digit growth on record-low policy rate

Source: Xinhua | 2020-06-30

South Korea's corporate bond sale posted a double-digit growth last month on the back of an all-time low policy rate, financial watchdog data showed Monday.

The issuance of corporate bond reached 15.9 trillion won (13.2 billion U.S. dollars) in May, up 39.2 percent from the previous month, according to the Financial Supervisory Service (FSS).

It marked the first increase in three months as the country's central bank cut its benchmark interest rate by 25 basis points to an all-time low of 0.50 percent in May.

Companies rushed to secure liquidity on worry about an economic fallout from the COVID-19 outbreak across the world.

Bond sold by industrial companies advanced 16.5 percent over the month to 4.9 trillion won (4.1 billion U.S. dollars) in May. Of the total, debts issued by companies with a credit rating of A or lower accounted for 18 percent, up 13.5 percentage points from a month earlier.

Bond issued by financial companies jumped 42.4 percent in the cited month, and the asset-backed securities (ABS) issuance more than tripled to 2.1 trillion won (1.7 billion U.S. dollars).

The sale of primary collateralized bond obligation (P-CBO) took up 44.3 percent of the total ABS issuance.

The corporate equity financing, including initial public offering (IPO) and rights issuance, amounted to 172.4 billion won (143.6 million U.S. dollars) in May, more than tripling compared with the previous month.

Meanwhile, the sale of short-term debenture, including commercial paper (CP), declined 5.8 percent from a month earlier to 95 trillion won (79.1 billion U.S. dollars) in May.

The issuance of CP, sold by industrial and financial companies, declined 17.2 percent, but the sale of asset-backed commercial paper (ABCP), which securitizes the project financing (PF) property loan as underlying asset, more than doubled last month.