Corporate bond sales in S.Korea rise in January on refinancing demand

Corporate bond sales in South Korea increased in January due to refinancing demand from industrial companies, financial watchdog data showed Thursday.

Corporate financing, which includes bond issuance by industrial companies, banks and financial institutions, reached 8.73 trillion won (7.1 billion U.S. dollars) in January, up 2.4 percent from the previous month, according to the Financial Supervisory Service (FSS). From a year earlier, it was up 21.6 percent.

The growth came on the back of demand from industrial companies for refinancing existing debts amid record-low interest rates.

The Bank of Korea (BOK) cut its policy rate by 25 basis points in March and June last year to an all-time low of 1.5 percent, keeping it on hold for eight straight months.

Industrial companies sold 3.52 trillion won in bond in January, up 85.8 percent from the previous month. Issuance for refinancing more than doubled to 1.72 trillion won in January.

Bond sales by financial institutions reduced 5.1 percent in January as insurers and securities firms issued no bonds. Bond issuance by banks surged 48.5 percent, but sales of asset-backed securities (ABS) tumbled 77.9 percent.

Equity financing, which gauges initial public offering (IPO) and rights offer, declined 34.4 percent from a month earlier to 570 billion won in January amid downward trend in local stocks. Enditem