Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Securities firms resume issuing bonds
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By Anna J. Park
By Anna J. Park
Local brokerage companies have begun issuing corporate bonds, as the country's credit market shows signs of stabilization this month, following a volatile credit crunch crisis over the past few months. With improved investor sentiment and market stabilization, corporate bonds' interest rates also fell back slightly to the five percent range from last month's six percent range.
According to the investment banking industry, Meritz Securities issued corporate bonds worth 160 billion won ($124 million) last Friday, with an interest rate of 5.95 percent for 17 months' maturity. The brokerage company's corporate bonds' interest rate fell by 62 basis points in less than a month, since it issued one-year maturity bonds worth 230 billion won at an interest rate of 6.57 percent. The fall of the bonds' interest rates in December, despite a prolonged maturity period of five more months, demonstrates that country's corporate bond market has been stabilized during the past month.
Mirae Asset Securities also issued 20 billion won worth of senior bonds last Wednesday with three-year maturity at an interest rate of 5.449 percent. It was the company's first issuance of corporate bonds in six months. Shinhan Securities also issued senior bonds worth 100 billion won last week, which was its first time to do so in four months.
Market insiders expect that small and medium-sized domestic brokerage companies would continue issuing bonds in the months to come, to prepare for a possible crisis from real estate project financing. Some view that the series of recent bonds issuances by securities companies aim at avoiding competition with top-rated companies, such as KT and POSCO, in attracting capital for their operation.
“Due to securities companies' exposure to risks related to real estate project financing as well as concerns over their unstable earnings, these companies have relative difficulty securing demand for their bonds, compared to top-rated companies. The brokerage companies seem to be avoiding such competition, given that these blue-chip companies plan to issue corporate bonds early next year,” a credit analyst at a local brokerage company pointed out.