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Smaller firms struggling in debt market despite low interest rates

All News 10:01 September 16, 2019

SEOUL, Sept. 16 (Yonhap) -- Small-and medium-sized enterprises (SMEs) in South Korea have been shunned by investors, although low market rates helped big firms raise more money through debt sales, data showed Monday.

According to the data by the Financial Supervisory Service and the Bank of Korea, the value of bonds by non-financial firms floated between January and July stood at 31.9 trillion won (US$26.9 billion), up 36.4 percent from a year ago.

However, no SMEs have succeeded in floating bonds since January, the data showed.

Last year, SMEs sold 130 billion won worth of bonds, accounting for 0.4 percent of the total value of corporate bonds by non-financial companies.

Analysts said small businesses were shunned by the bond market because most debts of SMEs were rated non-investment grade.

Lee Sang-man, a researcher at Hana Financial Investment, said, "It is difficult for SMEs to get an investment grade in the bond market. Given the situation, SMEs have not benefited from low interest rates."

Smaller firms struggling in debt market despite low interest rates - 1


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