Korean corporate borrowers ready bond issuance in 2024

South Korea’s corporate bond market is expected to turn bullish in 2024, with a record of nearly 70 trillion won ($53.7 billion) in debt maturing next year, data showed Monday.

According to Hyundai Motor Securities Co., about 64 trillion won in corporate debt is expected to mature next year, up from 53 trillion won this year.

The volume of corporate debt maturing in 2024 increased as more companies issued bonds with shorter maturities – less than two years – amid hikes in interest rates this year.

Market volatility observed during the second half forced some companies to delay bond issuance or rely on short-term funding sources.

“More corporate bond issuance is expected at the beginning of the next year due to unaddressed demand for financing and postponed issuances,” said Lee Hwa-jin, an analyst at Hyundai Motor Securities.

According to data from the Korea Financial Investment Association, net issuance of corporate debt fell below 4 trillion won in 2022, compared to 33 trillion won each in 2020 and 2021.

There has been a gradual recovery in the corporate bond market this year, with net issuance reaching about 11 trillion won, but it is still considered below the optimal level.

Corporate bond issuance typically peaks in January and February of each year.

According to the Financial Supervisory Service (FSS), corporate debt issuance totaled 19.2 trillion won in the first quarter of 2023, accounting for 45 percent of the entire volume between January and November.

Most of the issuance was witnessed in January and February with 6.1 trillion won and 8.42 trillion won, respectively.

Several companies are already gearing up to issue corporate bonds in January 2024, including Hanwha Aerospace Co., which plans to issue two-year, three-year, and five-year corporate bonds totaling 200 billion won.