이 기사는 2020년 03월 18일 08:00 thebell 에 표출된 기사입니다.

Global financial markets have been hit hard by the coronavirus pandemic. Not only stock markets have plunged, but also bond market conditions have been changing dramatically.

Global bond markets are crashing due to the coronavirus outbreak. As uncertainties in the financial markets heighten amid the coronavirus fears and oil price crash, institutions are increasingly reluctant to put more money into the markets. It is said that interest rates on U.S. commercial papers and repurchase agreements, used by companies for short-term loans, have almost doubled in a week.

Investor sentiment on Korean paper also has been dampened. Korean paper refers to foreign currency debt issued by South Korean entities abroad. Credit default swaps (CDS) premium for South Korea’s foreign exchange stabilization bonds with five-year maturities surged to 47 basis points on March 10, which were hovering around 20 basis points before the outbreak of the virus. Market interest rates on Korean paper issued by the Export-Import Bank of Korea (Eximbank) jumped to 80 basis points higher than those on comparable-maturity U.S. Treasuries on March 13. Market interest rates on the Korean paper were 60 basis points higher than those on comparable-maturity U.S. Treasuries a week ago.

“Market interest rates on Korean paper issued by Eximbank and Korea Development Bank (KDB), which are considered the benchmarks of Korean paper, have risen around 20 basis points in a week,” said an industry source, adding, “The volatility has been maximized with market interests on Korean paper rising 20 basis points to 30 points in a week, which makes almost impossible to issue foreign currency-denominated bonds.”

Domestic companies’ credit ratings also have come under pressure. Global credit ratings agency Moody’s has downgraded its rating on LG Chem by one-notch to Baa1 last month. It has also cut its outlook for Hanwha Total to negative from stable. Both companies are new issuers of Korean paper, which are experiencing a worsening of credits one year after the issuance. Standard & Poor’s also warned credit ratings of South Korean companies could come under pressure due to the outbreak of coronavirus.

Amid worsening fundraising environment and dampening fundamentals, concerns about domestic companies’ issuance of foreign currency-denominated bonds are rising. With World Health Organization (WHO) declared novel coronavirus outbreak a pandemic, negative impacts on export-oriented domestic companies are inevitable.

It is said that domestics companies’ recent issuance of foreign currency-denominated bonds via private placement also haven’t gone smoothly.

In the meanwhile, some point out that the issuers are having difficulties accepting unfavorable market conditions immediately. South Korean issuers have sold Korean paper around 20 basis points to 30 basis points lower than initial pricing guidance (IPG) until January thanks to booming Korean paper market in 2019.

(By reporter Pi Hye-rim)