Corporate bond issues in South Korea recovered to the pre-COVID-19 levels in May, with foreign capital balance hitting record high.
According to data from the Korea Financial Investment Association, companies in Korea issued 11.4 trillion won ($9.47 billion) in bonds in May, up 54.1 percent from a month ago. Corporate bond issuance reached nearly pre-COVID-19 level of 12.3 trillion won in February when new coronavirus outbreak was still restricted to Asia.
Corporate bond issuance in Korea plunged in March to 5 trillion won due to upset financial market amid coronavirus outbreak and stayed subdued at 7.4 trillion won in April.
Issuance of AA-rated debt jumped from 3.7 trillion won in April to 5.1 trillion won in May and A-rated debt from 200 billion won to 1.3 trillion won during the same period after state-led bond purchase program was launched to aid corporate liquidity.
Companies drew 4 trillion won in total 49 book building sessions in May, up from 3.5 trillion won in April and 1.7 trillion won in the same month a year ago. Investors’ appetite for high-grade bonds was high, the associated said.
Credit spread – the difference in yield between treasury and corporate bonds with three-year maturity – for AA- rated debt was 133 basis points in May, up 12 basis points from a month ago, and BBB- 763 basis points, up 18 basis points during the same period.
Credit spread narrowed for high-grade debt,