Woori Card will issue 320 billion won in long-term commercial paper (CP) on the 16th, targeting SK Hynix's investment demand. The issuance comprises 210 billion won in 27-month CP and 110 billion won in 30-month CP, both at a 4.04% discount rate. SK Hynix, which has emerged as a major buyer in the credit bond market, is expanding its investment horizon from short-term instruments to longer maturities, creating renewed demand for card company long-term CP. Woori Card benefits from a lower funding cost compared to issuing card bonds of equivalent maturity—the previous day's AA0-rated card bond 2.5-year rate stood at 4.395%. This transaction marks a revival in the card company long-term CP market, which had seen limited activity, and reflects broader industry efforts to diversify funding sources beyond traditional card bonds.
Woori Card Announces 320 Billion Won Long-Term CP Issuance on the 16th
According to the financial sector on the 10th, Woori Card plans to issue 320 billion won in long-term CP on the 16th. The issuance is structured as 210 billion won in 27-month CP and 110 billion won in 30-month CP. The discount rate for both the 27-month and 30-month CP is set at 4.04%. Market observers attribute the issuance to SK Hynix's investment demand, which has recently positioned the company as a significant player in the credit bond market. SK Hynix assessed the investment appeal of long-term CP based on absolute interest rate levels. For Woori Card, the transaction enables fundraising at a lower rate than issuing card bonds of equivalent maturity. The previous day's AA0-rated card bond 2.5-year rate stood at 4.395%, meaning Woori Card secures funding at a rate lower than card bonds through this long-term CP issuance.
SK Hynix Investment Demand Drives Card Company Long-Term CP Market Revival
SK Hynix has historically invested primarily in short-term instruments such as CP and financial bonds with maturities of one year or less, considering liquidity factors. Recently, the company has gradually extended its investment maturities. This shift is forming renewed demand in the card company long-term CP market, which had seen limited issuance activity. SK Hynix continues to purchase credit bonds across public bonds, bank bonds, securities bonds, and card bonds, driven by a surge in surplus funds due to favorable semiconductor industry conditions. Woori Card net issued over 1.3 trillion won in card bonds in the first half of this year alone, and now proceeds with long-term CP fundraising exceeding typical issuance volumes. Woori Card previously issued 200 billion won in long-term CP in June last year, when card bond issuance was limited to refinancing maturing volumes, resulting in net issuance of only around 20 billion won. A bond market official stated, "This Woori Card long-term CP issuance is tailored to Hynix demand," adding, "We understand there was also a purpose to diversify funding sources through long-term CP fundraising beyond existing card bonds."
Woori Card Pursues Funding Diversification Beyond Card Bonds
Other card companies currently have no long-term CP issuance plans, maintaining a policy to pursue issuance when appropriate maturity and rate levels form based on fund management needs after comprehensively considering market conditions. For Woori Card, the transaction serves not only to meet Hynix's bond purchase demand but also to diversify its funding structure. Card companies have expanded funding diversification this year, including overseas asset-backed securities (ABS), environmental, social, and governance (ESG) bonds, and kimchi bond issuance. This strategy aims to reduce funding cost burdens and move away from a funding structure concentrated on domestic corporate bond issuance, as card bond funding rates have risen to the 4% level. A Woori Card official stated, "We have continuously utilized long-term CP as a funding method to supplement corporate bonds," adding, "This issuance was conducted considering our funding needs and investment demand, and we plan to pursue issuance in the future if there is investment demand for long-term CP, after comprehensively reviewing market conditions and funding circumstances."
FAQ
What is Woori Card issuing on the 16th?
Woori Card is issuing 320 billion won in long-term commercial paper (CP) on the 16th, structured as 210 billion won in 27-month CP and 110 billion won in 30-month CP, both at a 4.04% discount rate.
Why is Woori Card issuing long-term CP instead of card bonds?
Woori Card is issuing long-term CP to meet SK Hynix's investment demand and to secure funding at a lower rate than card bonds—the 4.04% discount rate is below the previous day's AA0-rated card bond 2.5-year rate of 4.395%.
How is SK Hynix influencing the card company CP market?
SK Hynix has expanded its investment maturity from short-term instruments to longer-term CP, creating renewed demand in the card company long-term CP market, which had seen limited issuance activity in recent periods.
