Corporate bond sales in S. Korea reduce on shipbuilder woes

Corporate bond sales in South Korea reduced last month as concerns about key local shipbuilders weakened sentiment in the debt financing market, financial watchdog data showed Thursday.

Direct corporate financing, including sales of stocks and bonds, came to 10.18 trillion won (8.9 billion U.S. dollars) in October, down 6.9 percent from a month earlier, according to the Financial Supervisory Service (FSS).

Corporate bond issuance slumped 8.8 percent from a month earlier to 9.58 trillion won in October as sentiment among investors turned sour on worries about major shipbuilders that were suffering heavy losses from offshore plant orders.

Daewoo Shipbuilding & Marine Engineering, the third-biggest shipbuilder, is estimated to have booked more than 5 trillion won in losses, with the No. 1 shipyard Hyundai Heavy Industries having recorded big losses from offshore plant orders.

Net repayment in the debt financing market increased from 383 billion won in September to 1.42 trillion won in October, indicating that companies had trouble in refinancing debts in the bond market.

Equity financing, including initial public offering and rights offering, increased to 598 billion won in October from 435 billion won in September thanks to ample liquidity caused by the record-low interest rate. Endit