이 기사는 2022년 04월 13일 08:06 thebell 에 표출된 기사입니다.

South Korean companies are taking a wait-and-see approach before finalizing their bond issuance timeline amid interest rate uncertainty.

Companies that have planned to issue public bonds in April have postponed their issue date until May, according to industry sources on Monday. Tepid demands from institutional investors have made them reluctant to proceed with the original plan.

Investors are waiting to see if uncertainties over interest rate ease after early May. The U.S. Federal Reserve is expected to raise interest rates by a half percentage point in May. Many Fed officials wanted to raise interest rates by a half percentage point in March but opted for a smaller quarter-point increase because of uncertainty associated with Russia’s invasion of Ukraine.

If the Fed signals more rate hikes after its interest rate increase in May, there will be possibility of a reverse in interest rates between South Korea and the U.S. The Federal Open Market Committee (FOMC) decided to raise the target range for the federal funds rate to 0.25–0.50% in its meeting in March, which is 0.75 percentage points lower than Korea’s policy rate at 1.25%. The interest rate spread between the two counties will be narrowed to 0.25 percentage points after the Fed’s half percentage point rate hike next month.

The Bank of Korea (BOK) will determine the direction of monetary policy depending on the Fed’s interest rate hike in May as the U.S. central bank’s aggressive move to tighten its monetary policy may prompt capital outflows from the country's financial markets. Domestic investors are even considering a scenario where the Fed makes seven quarter-of-a-percentage-point interest rate hikes this year to contain inflation, which would bring the Fed's policy rate to a range of 1.75%-2% by the end of the year.

The BOK is widely expected to freeze its policy interest rate at 1.25% at its rate-setting meeting Thursday as former BOK governor Lee Ju-yeol's term ended on March 31.

At the BOK’s next rate-setting meeting scheduled for May 26, the central bank is highly likely to increase its interest rate by a quarter percentage point if BOK governor nominee Rhee Chang-yong takes office next month.

“Demand for bonds will revive only when investors are able to ease the burden of losses,” a market insider said. (Reporting by Chan-mi Oh)