Polarization spread in South Korea's corporate bond market as demand was focused on highest-rated corporate bonds amid worries about the ongoing corporate restructuring, financial watchdog data showed on Tuesday.
Sales of unsecured corporate bonds, floated by industrial companies, amounted to 3.47 trillion won (2.96 billion U.S. dollars) in May, down 25.8 percent from the previous month, according to the Financial Supervisory Service (FSS). The AAA-rated bond issuance reached 1.13 trillion won in May, up 162.7 percent from a month earlier. But the AA-rated bond sales tumbled 46 percent to 1.71 trillion won. Floatation of A-rated and BBB-rated bonds reached 320 billion won and 285 billion won each in May, down 56.4 percent and 12.3 percent respectively from the previous month. Demand for lower-rated bonds was crushed as the government has pushed for restructuring in troubling shipbuilders and shipping firms that are expected to cause massive layoffs and reduced investment.
For the first five months of this year, the corporate bond sales amounted to 15.99 trillion won, down 12.4 percent from the same period last year. Bond sales by financial companies reduced 23.6 percent from a month earlier to 3.13 trillion won in May, and bank debenture sales plunged 31.8 percent to 2.38 trillion won. Asset-backed securities (ABS) issuance declined 46.5 percent to 1.12 trillion won.
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