[Press Release] Analysis of direct corporate financing for February 2012 (March 26, 2011)

Analysis of Direct Corporate Financing for February 2012 Corporate financing through public offers (direct corporate financing Note1) amounted to KRW12.619 trillion in February 2012, up 16.2% or KRW1.759 trillion from KRW10.860 trillion in the previous month.

This was mostly attributed to the massive issuance of asset-backed securities (ABS) amid favorable conditions backed by low interest rates and the growing investment demand, and the increase in corporate bond issuance for refinancing purposes by Samsung Heavy Industries (KRW0.7 trillion) and Hyundai Heavy Industries (KRW0.5 trillion).

Equity issues came to KRW125.7 billion, down KRW150.7 billion from the previous month's KRW276.4 billion and bond issues amounted to KRW12.493 trillion, up KRW1.909 trillion from the previous month's KRW10.584 trillion.

Direct corporate financing in January and February 2012 cumulatively amounted to KRW23.479 trillion, down 5.6% from KRW24.884 trillion over the same period last year.

Equity Issues Equity issues in February 2012 amounted to KRW125.7 billion, down 54.5% or KRW150.7 billion from KRW276.4 billion in the previous month.

In February, there were three initial public offerings (IPOs) that raised KRW80.6 billion*, up 40.4% or KRW23.2 billion from two IPOs that amassed KRW57.4 billion in the previous month.

* Neuros (KRW4.3 billion), Saramin HR (KRW12.2 billion), Huvis (KRW64.1 trillion) Five rights offerings amassed KRW45.1 billion*, down 79.4% or KRW173.9 billion from three rights issues that raised KRW219.0 billion in the previous month.

Equity issues in January and February 2012 cumulatively amounted to KRW402.1 billion, up 84.4% or KRW2.183 trillion from KRW2.585 trillion over the same period last year.

This was mostly attributed to the base effect resulting from a massive KRW1.3 trillion rights offering by Hana Financial Group in February 2011.

Bond Issues Total corporate bond issues in February 2012 amounted to KRW12.493 trillion, up 18.0% or KRW1.909 trillion from KRW10.584 trillion in the previous month.

(Non-financials) In February 2012, non-financial companies issued KRW6.684 trillion of corporate bonds, up 30.9% from KRW5.105 trillion in the previous month. This resulted from the increase in corporate bond issuance for refinancing purposes and the growing investment demand backed by low interest rates.

(Financials) Financial companies issued KRW997.0 billion of bonds in February 2012, down 56.5% from KRW2.295 trillion in the previous month. This mostly resulted from the decrease in bond issuance by credit card companies (a KRW699.0 billion decrease) due to weakening profitability.

(ABS) New asset-backed securities amounted to KRW2.253 trillion in February 2012, up 562.6% from KRW340.0 billion in the previous month. This was attributed to the massive ABS issuance (KRW1.1 trillion by T 11th, KRW0.8 trillion by U+LTE).

(Bank debentures) Banks issued KRW2.559 trillion of debentures in February 2012, down 10.0% from KRW2.844 trillion in the previous month.

A snapshot of non-financial corporate bond issues by category is as follows.

(Size of issuer) Non-financial corporate bonds issued by large companies accounted for 99.9 % of all bonds that were issued in February 2012 with a value of KRW6.676 trillion. Non-financial corporate bonds issued by small-and-medium-sized companies only accounted for 0.1% with a value of KRW8.0 billion*.

*Samsung Pharm. Ind. (BW, KRW8.0 billion), (Type of securities) Straight bonds accounted for 99.9% of all non-financial corporate bonds issued in February 2012 with a value of KRW6.676 trillion. Hybrid securities (CB or BW) accounted for 0.1% of the total non-financial corporate bond issues with a value of KRW8.0 billion.

(Credit rating) Issuance of corporate bonds rated A or higher amounted to KRW6.466 trillion, representing 96.9% of all newly-issued non-financial corporate bonds in February 2012. Bonds rated BBB amounted to KRW210.0 billion, and none were rated BB or lower.

[Source: Financial Supervisory Service]

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