Korean investment-grade companies are turning to the debt market this month to raise funds before borrowing rates escalate due to increases in U.S. interest rates and on government promise to purchase under-subscribed bonds to prevent liquidity squeeze from economic uncertainties.
AA+ rated superstore chain operator E-Mart is set to auction off new issues worth 430 billion won ($360 million) next Tuesday. The retailer upped the pipeline scale from 300 billion won upon overwhelming demand in book-building.
On Jan. 23, Lotte Shopping (AA+) will issue bonds worth 250 billion won to fund working capital. On the following day, Hyundai Steel (AA) and Paradise (AA-) plans issues worth 300 billion won and 100 billion won, respectively. LG Uplus (AA) is readying 300 billion won issue on Jan. 25, making a comeback to the local bond market after a one-year hiatus.
The government said it will reactivate a stabilization bond fund and have state lenders purchase under-subscribed bonds to aid the corporate sector amid rising yields from developments in the United States - the triumph of unconventional candidate Donald Trump in the presidential election and rate hike in December and suggestion of faster increases throughout this year - on top of domestic political unrest following the impeachment of scandal-ridden president.
This has helped to encourage higher-yield debt issuers to venture into the debt market. Hansol Chemical (A-) hopes to market 50 billion won debt on Jan. 17 and CJ Hello Vision (A+) 100 billion won on Jan. 20. BBB-rated Halla also would venture 50 billion won debt this month for the first time in nearly four years.
By Park Yoon-gu
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]