Published : Feb. 24, 2016 - 14:09
Korean companies listed on its tech-heavy secondary bourse nearly doubled their issuance of equity-linked bonds in 2015 as the traditional corporate bond market remained in the doldrums, a report said Wednesday.
The value of equity-linked bonds issued by KOSDAQ firms came to 2.05 trillion won ($1.7 billion) last year, a 94.7 percent jump from 1.052 trillion won a year earlier, according to the report by the Korea Capital Market Institute (KCMI).
Buildings of securities buildings in Seoul (Yonhap)
The issuance of convertible bonds, which give holders the right to convert them into common shares after a given period, soared 75.6 percent on-year to 1.69 trillion won, or 83 percent of the total.
The KCMI attributed the surge in equity-linked bond issues to a prolonged slump in the corporate debt market.
"The main culprit is the sluggish corporate bond market," said Lim Tae-hoon, a KCMI researcher. "And KOSDAQ-traded companies tend to have a limited access to raising funds by issuing corporate bonds."
Moreover, credit rating agencies have downgraded some of them
due to their poor performances and financial health amid worsening business environments, he added.
Lim expects additional downgrades on ill-performing companies this year and the corporate bond market to shrink further. Largely hit by the won's volatility and slowing demand from China, big conglomerates and smaller businesses posted worse-than-expected earnings in the past quarters. Weak domestic demand remains another headache for them. (Yonhap)