Equity issues ground to a halt, bond offerings surge in Seoul in Jan

  SEOUL, March 06 (AJP) - Stock issues virtually came to a halt in January amid overheat concerns while bond issues — particularly in one- to five-year maturities — surged in Seoul, reflecting fears of borrowing rates going higher.

According to the Financial Supervisory Service on Friday, total offerings in Korean equities and bonds in January came to 17.7440 trillion won ($12 billion), down 226.4 billion won, or 1.3 percent, from the previous month.

Stock issuance totaled 108.2 billion won, off 2.4 trillion won, or 95.7 percent, from 2.4880 trillion won a month earlier and 85.4 percent from a year earlier against the base effect of large-size rights offerings in December, including Hanon Systems (980 billion won) and KDB Life Insurance (500 billion won).

Rights offerings raised 28.7 billion won, down 98.5 percent from the previous month. Initial public offerings totaled two deals worth 79.5 billion won, a decline of 86.6 percent.

Corporate bond issuance, in contrast, surged to 17.6358 trillion won, up 2.1534 trillion won, or 13.9 percent, from the previous month. Issuance of general corporate bonds jumped to 7.1765 trillion won from 230 billion won, an increase of 3,020.2 percent, as companies mostly in AA or higher investment grade rushed to issue debt on signs of higher yields in U.S. Treasuries and Korean government bonds.

For general corporate bonds, refinancing accounted for 5.5010 trillion won, or 76.7 percent of the total, while operating funds and facility investment made up 18.9 percent and 4.5 percent, respectively. By credit rating, AA or higher issues represented 93.6 percent, and by maturity, midterm bonds accounted for 98.5 percent.

Financial bond issuance fell 29.4 percent from the previous month to 9.7141 trillion won. As of the end of January, outstanding corporate bonds totaled 752.8585 trillion won, down 0.5 percent from a month earlier.

Issuance of commercial paper and short-term bonds in January totaled 154.7302 trillion won, down 24.0329 trillion won, or 13.4 percent, from the previous month. Commercial paper rose 8.2 percent to 46.8926 trillion won, but short-term bonds fell 20.4 percent to 107.8376 trillion won, pulling down the overall total.