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Corporate bonds

Corporates raise record-high $193 bn via stakes, bonds in 2021

Stock issuance via IPOs and rights offerings reached $24.3 billion, up as much as 166.5% from 2020

By Jan 25, 2022 (Gmt+09:00)

2 Min read

Korean game developer Krafton Inc.'s IPO (Courtesy of Yonhap News)
Korean game developer Krafton Inc.'s IPO (Courtesy of Yonhap News)

Korean companies raised capital of 231.5 trillion won ($193.2 billion) through stock and bond issuance in the domestic market in 2021, according to the Financial Supervisory Service (FSS) on Jan. 25. The highest-ever financing soared by 19 percent from 2020. South Korean companies also issued commercial papers and short-term debentures with a combined worth of 1.7 quadrillion won last year.  

Stock issuance through initial public offerings and rights offerings reached 29.1 trillion won in 2021, up a whopping 166.5 percent from 10.9 trillion won in 2020.   

Some 110 IPOs issued new stocks last year, raising a record-high 14.5 trillion won. This is over threefold the 3.8 trillion won of equities issued by 87 IPOs in 2020. The 2021 IPO amount also broke the previous record of 5.9 trillion won in new stock issues in 2017.

Korean big techs such as Krafton Inc., KakaoBank Corp., Kakao Pay Corp. were listed last year raising 2.8 trillion won, 2.6 trillion won and 1.5 trillion won, respectively. Shipbuilding giant Hyundai Heavy Industries Co. made its public market debut with 1.1 trillion won raised. On the secondary bourse Kosdaq market, a total of 96 IPOs issued stocks worth 3.1 trillion won last year.

A total 89 rights offerings issued new stocks worth 14.6 trillion won in 2021, nearly doubling the 7.9 trillion won worth of shares issued through 70 rights offerings in 2020. Among the rights offerings last year was the nation's flag carrier Korean Air Line Co., which raised 3.3 trillion. Conglomerate affiliates Hanwha Solutions Corp., Samsung Heavy Industries Co. and Hanwha Systems Co. each raised 1.3 trillion won through their rights offerings. Hanwha Systems Co. issued 1.2 trillion worth of new stocks as well.  

MORE SHORT-TERM BONDS DUE TO RATE HIKES 

Corporate bonds issued on the public markets last year reached 202.4 trillion won, up 10.3 percent from 183.6 trillion won in 2020. Straight bonds issuance in 2021 amounted to 46.7 trillion won, increasing 11.1 percent from 42.1 trillion won in 2020. LG Chem Ltd., SK Inc. and SK Hynix Inc. each issued bonds worth 1.2 trillion won. Korea South-East Power Co. and E-mart each issued more than 1 trillion won in bonds.  

Issuance of corporate bonds with AA and higher ratings in 2021 reduced by 935 billion won, or 9.2 percentage points, compared with 2020. On the other hand, A-rated bonds jumped by 4.1 trillion won or 7 percentage points. Bonds with BBB or lower ratings also increased by 1.2 trillion won or 2.2 percentage points last year.

Short-term corporate bond issuance expanded last year amid interest rate hikes and an increase in low-rated bonds. Long-term bonds with more than five-year maturity reduced by 8.2 trillion won, or 21 percentage points. Mid-term bonds, with a maturity of more than one year and up to five years, surged by 12.4 trillion won or 20.2 percentage points.

Write to Hyun-il Lee at hiuneal@hankyung.com
Jihyun Kim edited this article.
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