Korea Land and Housing Corporation (LH) expanded its bond issuance limit to 20 trillion won this year, emerging as a major player in the public bond market. The state-owned housing developer increased issuance to secure funding for metropolitan housing supply projects, particularly the Third New Town development. However, the expansion raises financial management concerns as the corporation's debt ratio is projected to climb from 226.1% in 2024 to 260.3% by 2029, requiring careful balance between fundraising needs and fiscal sustainability.
LH Net Issuance Reaches 6.38 Trillion Won Since Start of Year
According to Yonhap Infomax issuance and maturity statistics, LH issued approximately 10.64 trillion won in won-denominated public bonds since the start of the year. With 4.25 trillion won in bonds maturing during the same period, the corporation recorded net issuance of 6.38 trillion won. This marks a significant increase from the same period last year, when net issuance totaled only 5 billion won. During January to mid-July 2024, net issuance reached 790 billion won.
LH raised its bond issuance limit from 15 trillion won to 20 trillion won this year to strengthen liquidity response capacity. The corporation plans to utilize multiple funding channels including won-denominated bonds, land compensation bonds, and foreign currency bonds. The increased issuance supports LH's goal to begin construction on 86,000 housing units in the metropolitan area this year, as stated in its business report.
Kim Sang-man, researcher at Hana Securities, noted that "when examining the mid- to long-term financial management plans of public corporations, the SOC (social overhead capital) sector is expected to see the largest increase, with LH accounting for an absolute proportion within that sector. LH could become the key to future public bond supply and demand, which the market is closely watching."
Debt Ratio Projected to Reach 260.3% by 2029
LH's mid- to long-term financial management plan projects the debt ratio will increase from 226.1% in 2024 to 260.3% in 2029. Total debt is expected to expand from 170 trillion won in 2025 to 261.9 trillion won during the same period. The corporation attributes rising debt pressure to suspended land sales reducing revenue, increased cases of land sale cancellations and delinquencies, and deteriorating profitability in housing projects due to rising costs.
LH acknowledged the need for debt management in its business report, stating it will improve the profit structure of housing projects and diversify funding methods to prepare for increased bond issuance. The corporation emphasized it will not hastily expand bond issuance limits under the pretext of new projects.
An LH official stated, "Next year's issuance limit must be reviewed based on project execution schedules including the Third New Towns and actual funding requirements. It is appropriate to determine the proper level while examining internal fund inflows and bond market acceptance conditions together." The official added, "We aim to implement a funding strategy that goes beyond simple capital raising, optimizing the selection of domestic and international markets with the most favorable timing and appropriate maturity structure."
FAQ
What is Korea Land and Housing Corporation's bond issuance limit this year?
Korea Land and Housing Corporation (LH) expanded its bond issuance limit to 20 trillion won this year, up from the previous 15 trillion won. Since the start of the year, LH has issued approximately 10.64 trillion won in won-denominated public bonds, with net issuance reaching 6.38 trillion won after accounting for matured bonds.
Why is LH's debt ratio projected to increase?
LH's mid- to long-term financial management plan projects the debt ratio will rise from 226.1% in 2024 to 260.3% by 2029. The corporation attributes this to suspended land sales reducing revenue, increased land sale cancellations and delinquencies, and deteriorating profitability in housing projects due to rising costs. Total debt is expected to grow from 170 trillion won in 2025 to 261.9 trillion won in 2029.
