Companies raise record 143 trillion won with stock and bond issuances


Korea’s direct financing surged last year as local firms rushed to secure extra capital in the face of the worsening eurozone fiscal crisis, data showed Wednesday.

According to the Financial Supervisory Service, Korean companies raised a record 143.39 trillion won ($126.31 billion) in 2011 through stock and bond issuances, up 16.3 percent from 123.26 trillion won tallied the previous year.

The sharp increase came as Korean companies felt greater pressure stemming from the sovereign debt debacle that accelerated a sense of crisis and a possible liquidity shortage ahead of the massive maturity of corporate bonds valued at 25.2 trillion won scheduled for the first half of 2012.

In particular, corporate bond issuances soared 15.6 percent on-year to stand at 130.49 trillion won last year, while stock issuances rose 24.8 percent on-year to 12.9 trillion.

The corporate bonds issued by non-bank firms played a key role in boosting the total amount, suggesting that the general mood among local companies was in favor of extra ammunition to grapple with the economic slump.

The low-interest rate also helped. The Bank of Korea kept the benchmark rate unchanged at 3.25 percent for the seventh straight month in January, keeping the corporate bond environment relatively favorable.

Another notable trend was that major firms such as Hana Financial Group, Shinhan Financial Group and LG Group opted for rights offerings, which went up by a whopping 73.4 percent last year from 2010.

But the initial public offering market remained in a slump, with investors showing reluctance to bet on new companies at a time when the broader economy is going through a turbulent phase due largely to the eurozone crisis and greater concerns about the economic slowdown at home.

The funds raised through the IPO shrank 43.3 percent to 2.44 trillion won last year.

By Yang Sung-jin (insight@heraldcorp.com)