South Korean securities issuance fell sharply in April as capital market remained cold under pandemic scare despite massive state-led corporate bond purchase program.

Stock and debt issues by companies amounted to 11.47 trillion won ($9.3 billion) in April, down 28.8 percent from a month earlier, according to the Financial Supervisory Service on Thursday.

Stock offerings plunged 89.6 percent from the previous month to stop at 48.6 billion won in April. There was zero initial public offering.

Debt sales were mostly restricted to big companies and lenders.

Corporate debt issues fell 27 percent on month to 11.4 trillion won.

Bond issues by non-financial companies jumped 60.2 percent on month to 4.2 trillion won to cover their maturing debt. The lion’s share – 95.5 percent – of the offering was in debts rated AA or higher.

Short-term debts mostly raised by lower-grade companies fell 24.3 percent to 100.9 trillion won.

Issues by financial companies plummeted 48 percent to 5.8 trillion won and asset-backed securities by non-banking institutions plunged 23.3 percent to 1.37 trillion won.

Bond issues by financial holding companies jumped to 600 billion won from previous month’s 50 billion won. But issues from banks plunged 88.2 percent to 850 billion won, with state banks cutting issues by 90.3 percent and regional banks 60.0 percent as big lenders were required to raise funding to back state-led programs to stabilize the capital market.

Other financial bond issues totaled 4.4 trillion won, up 10.5 percent over the same period. Securities companies issued 200 billion won worth bonds, compared with none a month ago. Credit card companies expanded issues 57.6 percent while installment finance companies reduced 18.6 percent. There was no issuance from other financial companies.

Primary collateralized bond obligation (P-CBO) issuance totaled 306.8 billion won, up 74.4 percent over the same period, led by state-sponsored bond purchase program.

Big bond issuers in April were Samsung Card (970 billion won), KB Kookmin Bank (650 billion won), Kia Motors (600 billion won), SK Energy (550 billion won), and Shinhan Financial Group (500 billion won).

Outstanding balance of corporate bonds stood at 534.0 trillion won at the end of April, down 0.5 percent from a month earlier.

Commercial paper issues in April decreased 27.2 percent to 23.8 trillion won from a month earlier. Short-term debt issues also fell 23.3 percent to 77.06 trillion won.

Balance of outstanding commercial papers came to 184.1 trillion won at the end of April, down 2.0 percent from a month ago. The balance of short-term debts was down 2.8 percent on month to 55.09 trillion won.

By Cho Jeehyun

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