이 기사는 2020년 01월 06일 08:00 thebell 에 표출된 기사입니다.

South Korean corporate bond issuance hit a record high in 2019. Net issuance of debt continued throughout the year, as companies seeking to take advantage of low interest rates scrambled to issue bonds.

According to the bell’s league tables, the domestic issuance of corporate debt – which includes straight bonds, financial bonds and asset-backed securities (ABS) – totaled 133 trillion won ($115 billion) in 2019, setting a new record again following the previous year with 123 trillion won ($106 billion).

This was not surprising given that the issuance boom, which started at the beginning of the year, continued until year-end as interest rates kept falling. Persistent economic uncertainty also encouraged companies to issue bonds to lock in low interest rates.

By bond type, straight bonds led the way in 2019, with total issuance of 62.6 trillion won ($54.1 billion), up more than 20 percent compared to the previous year. 2019 represents the first year that new issuance of straight bonds exceeded 60 trillion won since the book-building process was introduced to the domestic corporate bond market in 2012.

The issuance of financial bonds held steady, totaling 55.31 trillion won ($47.8 billion). Meanwhile, ABS issuance dropped 7 percent to 14.97 trillion won ($12.9 billion).

Among conglomerates in the country, SK Group issued the largest amount of straight bonds overall in 2019, selling 8.435 trillion won ($7.29 billion) of straight debt in aggregate during the year. The nation’s third largest conglomerate secured the first spot for the fifth year since 2014, followed by LG Group, Lotte Group and Korea Electric Power Corporation (KEPCO).

By individual company, Shinhan Financial Group was the biggest issuer in 2019, selling more than 2 trillion won ($1.75 billion) worth of straight bonds. Woori Financial Group, POSCO, Korea Midland Power and LG Uplus also raised some 1.5 trillion won ($1.3 billion) each during the year. Total 15 issuers raised more than one trillion won in the corporate bond market in 2019, which represents the first year that the number exceeded 10.

A-rated bond issuance surges

In 2019, A-rated straight bond issuance exceeded AAA-rated issuance for the first time in seven years since the book-building process was introduced in 2012. ‘AAA’ is the highest rating based on domestic credit ratings. This is a consequence of both falling interest rates that boosted issuance and investors hungry for yields.

A-rated issuance totaled 14.188 trillion won ($12.2 billion), up almost 75 percent compared to 2018. On the other hand, AAA-rated issuance slightly declined to 12.265 trillion won ($10.5 billion).

Long-term bond issuance also increased. The issuance of straight bonds with maturity of more than 7 years totaled 17.244 trillion won ($14.8 billion) in 2019, accounting for 27.5 percent of total straight bond issuance. This was a notable increase from 19 percent in 2018.

“The issuance boom in the corporate bond market continued throughout the year without slowing down,” said a market insider. “Corporate bond issuance is expected to slightly decline going forward, as longer-term bond issuance increased significantly in 2019.”

(By reporter Lim Hyo-jung)