Korean debt issues tumble in Nov on concerns of borrowing rates going higher

 
SEOUL, December 24 (AJP) -Equity offerings thrived while debt issuance shrank in South Korea in November, cutting direct financing by nearly 2 trillion won ($1.4 billion) and underscoring an unfavorable borrowing environment for Korean companies, data showed Wednesday.

According to the Financial Supervisory Service, funds raised through stock and corporate bond issuance totaled 21.89 trillion won in November 2025, down 1.81 trillion won, or 7.6 percent, from the previous month. 

Direct financing refers to companies raising funds by issuing stocks or bonds without going through financial institutions.

Funds raised through stock issuance jumped to 821.4 billion won, up 727.5 billion won, or 774.8 percent, from October. Initial public offerings totaled 14 deals worth 410.9 billion won, all small and midsize IPOs listed on the KOSDAQ. The average IPO size rose to 29.3 billion won from 26.2 billion won a month earlier.

Rights offerings also increased, with seven deals worth 410.6 billion won, driven by greater fundraising for operating expenses and facility investment.

By contrast, corporate bond issuance fell to 21.07 trillion won, down 2.54 trillion won, or 10.8 percent. Corporate debt issuance nearly halved to 1.96 trillion won, down 45 percent. Refinancing accounted for 55.7 percent of issuance, sharply lower than 72.7 percent in October, while the shares for operating and facility funding expanded to 22.1 percent and 22.2 percent, respectively.

Issuance of financial bonds totaled 17.34 trillion won, down 893.7 billion won, or 4.9 percent. Issuance of financial holding company bonds and other financial bonds declined, while bank bond issuance rose 10.0 percent to 8.998 trillion won.

Asset-backed securities issuance came to 1.78 trillion won, down 2.6 percent, although issuance of primary collateralized bond obligations (P-CBOs) aimed at supporting small and midsize firms increased.

Issuance of commercial paper and short-term bonds surged, reflecting heightened market uncertainty over the trajectory of interest rates. Short-term bond issuance totaled 166.29 trillion won, up 28.65 trillion won, or 20.8 percent. Commercial paper edged up to 44.80 trillion won, while short-term bonds jumped 30.7 percent to 121.49 trillion won.

As of the end of November, outstanding corporate bonds totaled 756.23 trillion won, up 6.18 trillion won from the previous month. Net issuance of general corporate bonds extended its upward trend for a second consecutive month.

Separately, Asiana Airlines said Wednesday that it approved the issuance of 200 billion won in perpetual bonds to strengthen its capital base.

The carrier said the move aims to improve its debt ratio and overall financial health, as the won-dollar exchange rate has surged since the first half of the year and high interest rates have persisted.

Asiana said it recently received a one-notch credit-rating upgrade to BBB+, its first since 2015. The company attributed the upgrade to the removal of merger-related uncertainty following the sale of its cargo business in August, as well as to Korean Air’s full purchase of Asiana’s perpetual convertible bond refinancing in November.

With the higher credit rating and improved outlook for integration, Asiana said it was able to issue perpetual bonds on its own credit, without credit enhancement, for the first time since 2019. It added that it will continue efforts to strengthen its financial health to support stable integration.