Kiwoom Securities and Hanjin are conducting investor demand forecasting this week (July 13-17) for corporate bond issuances, marking a rare appearance of BBB-grade public bonds in South Korea's corporate bond market. Kiwoom Securities, rated AA0, plans to issue 200 billion won in bonds, while Hanjin, rated BBB+ with a positive outlook, is preparing a 40 billion won issuance. The issuances come as July's corporate bond market remains quiet, with general corporate issuance significantly reduced due to rising interest rates and weakened investor sentiment toward non-investment grade bonds following recent credit events including the JR Global REIT incident and Joongang Group issues.
Kiwoom Securities Plans 200 Billion Won Bond Issuance
Kiwoom Securities is pursuing a total 200 billion won corporate bond issuance. The tranches consist of 70 billion won in 2-year bonds and 130 billion won in 3-year bonds. Based on demand forecasting results, the issuance can be increased up to 400 billion won. KB Securities and Korea Investment & Securities serve as lead managers. Demand forecasting is scheduled for July 13, with the issuance date set for July 21. The proposed interest rate band is -30 to +30 basis points (bp) relative to individual private bond evaluation agency rates.
Hanjin Prepares 40 Billion Won BBB+ Rated Bond Offering
Hanjin is preparing a 40 billion won corporate bond issuance consisting of 20 billion won in 1-year bonds and 20 billion won in 1.5-year bonds. The company can increase the issuance up to 80 billion won depending on demand forecasting results. Five lead managers include NH Investment & Securities, KB Securities, Korea Investment & Securities, Kiwoom Securities, and Sangsangin Securities. Demand forecasting is scheduled for July 14, with issuance planned for July 23. The proposed interest rate band is -50 to +50bp for 1-year bonds and -40 to +40bp for 1.5-year bonds relative to individual evaluation rates. Hanjin currently holds a BBB+ rating with a 'positive' outlook. The wider interest rate band reflects the BBB-grade issuer status, though some market participants view Hanjin as relatively high-quality within the BBB category, with some investors considering it close to A-grade.
Corporate Bond Market Faces Weakened Issuance Amid Rate Concerns
The corporate bond market shows cautious sentiment from both issuers and investors. Rising corporate bond rates have increased funding cost burdens for issuers, while investors face heightened concerns about interest rate volatility and credit events. Investment demand for non-investment grade bonds has contracted following the JR Global REIT incident and Joongang Group-related issues. Securities firms with favorable first-half performance continue bond issuances, but general corporate issuance has declined significantly due to reduced funding incentives and limited market demand for non-investment grade ratings. Samsung Securities Global Bond Team leader Kim Eun-ki stated in a report that market attention is focused on whether issuance can recover during the second-half peak season of September-October. Kim noted that 13.4 trillion won in bonds mature in September-October, and corporate bond issuance decreases significantly after November due to year-end factors. Kim explained that despite September-October being the last period for increased second-half issuance, full-scale issuance recovery faces a difficult market environment due to the interest rate increase period and weak corporate bond investment demand raising concerns about widening issuance spreads. Kim added that the issuance market may partially recover in early next year due to corporate bond investment demand from year-start bond fund inflows.
FAQ
What bond issuances are Kiwoom Securities and Hanjin conducting this week?
Kiwoom Securities is conducting demand forecasting on July 13 for a 200 billion won bond issuance (70 billion won 2-year, 130 billion won 3-year) with issuance on July 21. Hanjin is conducting demand forecasting on July 14 for a 40 billion won bond issuance (20 billion won 1-year, 20 billion won 1.5-year) with issuance on July 23.
What is Hanjin's credit rating for this bond issuance?
Hanjin holds a BBB+ credit rating with a 'positive' outlook. The proposed interest rate band is -50 to +50bp for 1-year bonds and -40 to +40bp for 1.5-year bonds relative to individual private bond evaluation agency rates.
How much in bonds mature in September-October according to Samsung Securities?
According to Samsung Securities Global Bond Team leader Kim Eun-ki, 13.4 trillion won in bonds mature in September-October, though full-scale issuance recovery faces a difficult market environment due to interest rate increases and weak investment demand.
