Corporate financing activities have regained vitality in South Korea in May when the country eased social distancing restrictions, with securities issues sharply expanded from the previous month.
According to the Financial Supervisory Service on Monday, stock and debt issues by companies amounted to 16.07 trillion won ($13.34 billion) in May, up 40.1 percent from a month earlier.
Equity issues in May more than tripled to 172.4 billion won from previous month’s 48.6 billion won.
Three companies made additional offerings of 145.2 billion won, up from 48.6 billion won issued by two firms a month earlier.
There were two initial public offerings, totaling 27.2 billion won, with Ebest Special Purpose Acquisition No 5 Company and DreamCIS Inc. making debut in the Kosdaq market. There were no IPO made in the previous month.
Corporate debt issues came to 15.9 trillion won in May, up 39.2 percent from a month earlier.
Debt offerings by general companies rose 16.5 percent on month to 4.9 trillion won.
But they were mostly to refinance existing debts. Refinancing purpose made up 77.1 percent, operation funding 17.8 percent and facility funding 5.1 percent.
The share of corporate bonds with a credit rating of A or lower grew 13.5 percentage points from a month earlier.
Debt issues by financial companies jumped 42.2 percent to 8.3 trillion won and asset-backed securities nearly doubled to 2.7 trillion won. Other financial bond issues totaled 5.3 trillion won, up 20.4 percent over the same period.
Primary collateralized bond obligation (P-CBO) issuance totaled 1.2 trillion won, up from the previous month’s 306.8 billion won, led by the state-sponsored bond purchase program to aid small and medium sized enterprises.
Outstanding balance of corporate bonds stood at 539.5 trillion won at the end of May, up 1.0 percent from a month earlier.
Commercial paper issues in May gained 7.8 percent to 25.7 trillion won from a month earlier. Short-term debt issues fell 10.0 percent on month to 69.3 trillion won.
The balance of outstanding commercial papers came to 182.9 trillion won at the end of May, down 0.6 percent from a month ago. The balance of short-term debts was up 3.9 percent on month to 57.3 trillion won.
By Cho Jeehyun
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]