MENA Newswire News Desk: Corporate direct financing in South Korea saw a substantial increase in September, driven by a surge in debt sales, according to data released Tuesday by the Financial Supervisory Service. Local companies raised a total of 31.6 trillion won (approximately US$23 billion) in September by selling stocks and bonds, representing a sharp 57.6% increase from the 20.1 trillion won raised in August.
The significant uptick was attributed to heightened bond issuances, which outweighed a decline in stock sales. Equity issues dropped notably, falling 71% to 111.1 billion won from 383.7 billion won in the previous month. The sale of stocks through initial public offerings (IPOs) plunged by 73.7% month-on-month to 61.8 billion won. Similarly, rights offerings witnessed a significant decrease of 66.8%, reaching 49.3 billion won, compared to 148.6 billion won in August, according to the Financial Supervisory Service.
Despite the downturn in stock sales, bond issuances provided a substantial boost. In September, companies issued 31.5 trillion won in bonds, reflecting an increase of 11.8 trillion won, or 59.9%, from August’s figures. As of the end of September, the value of outstanding corporate bonds stood at 673 trillion won, an increase of 11.7 trillion won from a month earlier, highlighting the growing appetite for debt instruments in the corporate sector.
Additionally, local firms issued 41.3 trillion won in commercial papers, marking a 10.7% rise from the previous month. Short-term bond issuances also grew by 3.4%, reaching 78.5 trillion won in September. This surge in corporate direct financing is expected to play a crucial role in supporting business operations, especially amid the economic challenges posed by fluctuating global market conditions.