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4 firms to gauge investor demand for bond issues next week

All News 08:51 April 10, 2020

SEOUL, April 10 (Yonhap) -- Kia Motors Corp., South Korea's No. 2 automaker, and three other companies are slated to conduct demand forecasting for their debt sales next week amid a coronavirus-induced credit crunch, data showed on Friday.

The events are thus expected to serve as a litmus test for corporate financing in South Korea as the local bond market has taken a big hit from the spread of the novel coronavirus.

Kia Motors, an affiliate of South Korea's top carmaker Hyundai Motor Co., is scheduled to hold a demand forecasting session Tuesday for the issuance of unsecured bonds worth 330 billion won (US$273 million), according to the Financial Supervisory Board.

Major liquor maker Lotte Chilsung Beverage Co., chemicals manufacturer Hanwha Solutions Corp. and electronic control unit developer Hyundai Autron Co. will also gauge investor demand Monday.

Lotte Chilsung Beverage plans to float 150 billion won worth of debentures; Hanwha Solutions, 210 billion won; and Hyundai Autron, 50 billion won.

4 firms to gauge investor demand for bond issues next week - 1

Kia Motors and Lotte Chilsung Beverage are both rated "AA," while Hanwha Solutions boasts a credit rating of "AA-."

Market watchers said the country's recently created bond market stabilization fund is likely to participate in the scheduled demand forecasting sessions as the firms meet its investment requirements.

The 20 trillion-won fund has been set up to stabilize the domestic bond market and help local companies raise funds amid market turmoil caused by the coronavirus outbreak.

The fund decided Monday to purchase 30 billion won worth of bonds to be issued by Lotte Foods Co., its first decision to buy corporate debt.

The local corporate bond market has been hit hard by the coronavirus outbreak that has triggered worries over a global economic recession.

Corporate bond sales in South Korea tumbled by 7.3 trillion won from a month earlier to 5.1 trillion won in March, with the market turnover coming to 12.4 trillion won, down 6.5 trillion won from February.

Slumping demand has sent bond yields, which move inversely to prices, soaring. The benchmark yield on three-year corporate bonds remains in the 2 percent range after falling to 1.644 percent in early March.
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