17.7 Trillion Won in Direct Corporate Financing in January... Equity Issuance Plunges 95%, Corporate Bonds Up 14%

[Financial News] In January, the amount of funds companies raised through equity and corporate bond markets edged down slightly from the previous month. Corporate bond issuance surged on the back of the typical "start-of-year effect" as firms resumed capital spending, while equity issuance showed a stark contrast, plunging by more than 95% due to a base effect from large rights offerings in the previous month.
According to the report "Direct Corporate Financing in January" released by the Financial Supervisory Service (FSS) on the 6th, public offerings of stocks and corporate bonds totaled 17.744 trillion won in January, down 1.3% from the previous month. Over the same period, issuance of commercial paper (CP) and short-term bonds came to 154.7302 trillion won, a decrease of 13.4% month-on-month.
Equity issuance amounted to only 108.2 billion won across four deals, a sharp drop of 95.7% from the previous month. This reflects a base effect from December last year, when large-scale rights offerings by companies such as Hanon Systems (980 billion won) and KDB Life Insurance (500 billion won) were concentrated.
Initial public offerings (IPOs) totaled 79.5 billion won from two deals, down 86.6% by value compared with the previous month. All newly listed firms were small and mid-sized IPOs on KOSDAQ. Rights offerings were also limited to 28.7 billion won from two cases, a 98.5% decline from the previous month.
In contrast, the corporate bond market was buoyant. Corporate bond issuance in January reached 17.6358 trillion won, an increase of 13.9% from the previous month. In particular, issuance of straight corporate bonds came to 7.1765 trillion won across 59 deals, marking a surge of 3,020.2% month-on-month.
By use of proceeds, refinancing accounted for 5.501 trillion won, or 76.7% of total issuance. By credit rating, high-grade bonds rated AA or above made up 93.6% of issuance, totaling 6.72 trillion won.
Meanwhile, on an outstanding balance basis, CP stood at 240.2 trillion won and short-term bonds at 85.9 trillion won, up 5.4% and 1.7%, respectively, from the end of the previous month. This indicates that the cumulative amount of funds raised expanded slightly.
elikim@fnnews.com Kim Mi-hee Reporter