Shinhan Securities and GS Entech are conducting demand forecasting sessions for corporate bond issuance, with Shinhan Securities scheduled for July 7 and GS Entech for July 8. Shinhan Securities plans to raise up to 5000 billion won while GS Entech seeks 350 billion won in funding. The bond issuances come as South Korea's corporate bond market continues experiencing net redemptions, with May recording 4220 billion won in net redemptions for general corporate bonds according to the Financial Supervisory Service.
Shinhan Securities Plans Up to 5000 Billion Won Bond Issuance on July 7
Shinhan Securities (AA0 rating) will conduct demand forecasting on July 7 for a total of 2500 billion won in corporate bonds. The issuance comprises 1500 billion won in 2-year bonds and 1000 billion won in 3-year bonds. Based on demand forecasting results, the company plans to increase the issuance up to a maximum of 5000 billion won. The proposed interest rate band for both 2-year and 3-year tranches is set at -30 to +30 basis points (bp) relative to individual private bond evaluation agency rates. NH Investment & Securities and Samsung Securities serve as lead underwriters. The scheduled issuance date is July 15.
GS Entech Schedules 350 Billion Won Bond Offering with GS Global Guarantee
GS Entech will proceed with demand forecasting on July 8 for a total of 350 billion won in corporate bonds. The structure includes 200 billion won in 2-year bonds and 150 billion won in 3-year bonds, with no plans for increased issuance. The proposed interest rate band is -30 to +30bp relative to individual private bond evaluation agency rates. NH Investment & Securities, KB Securities, and Korea Investment & Securities serve as lead underwriters. The scheduled issuance date is July 16. GS Entech's corporate bonds carry principal and interest payment guarantees from GS Global.
Corporate Bond Market Records 4220 Billion Won Net Redemptions in May
Corporate bond issuance has been decreasing. According to the Financial Supervisory Service, May corporate bond issuance totaled 18.7813 trillion won, down 15.4% from April's 22.2021 trillion won. General corporate bonds recorded 4220 billion won in net redemptions, continuing the net redemption trend throughout the year.
Analysts Recommend Selective Investment in Higher-Grade Corporate Bonds
Kim Sang-in, researcher at Shinhan Investment & Securities, stated in a report: "Caution is needed as demand recovery remains sluggish due to remaining upside interest rate risks, and continued supply of ultra-high-grade bonds may act to widen credit spreads. We recommend investment in higher-grade corporate bonds expected to outperform in the second half due to low supply-demand pressure and solid fundamentals."
FAQ
What corporate bonds are Shinhan Securities and GS Entech issuing?
Shinhan Securities is conducting demand forecasting on July 7 for up to 5000 billion won in bonds (2-year: 1500 billion won, 3-year: 1000 billion won), with a scheduled issuance date of July 15. GS Entech is conducting demand forecasting on July 8 for 350 billion won in bonds (2-year: 200 billion won, 3-year: 150 billion won) with GS Global payment guarantees, scheduled for issuance on July 16.
Why is South Korea's corporate bond market experiencing net redemptions?
According to the Financial Supervisory Service, May corporate bond issuance totaled 18.7813 trillion won, down 15.4% from April. General corporate bonds recorded 4220 billion won in net redemptions in May, continuing the net redemption trend. Kim Sang-in of Shinhan Investment & Securities cited remaining upside interest rate risks and sluggish demand recovery as factors affecting the market.
