Direct financing by South Korean companies rose 9.5 percent on-month in July, led by an increase in initial public offerings (IPO) and corporate bond issuances, the financial regulator said Thursday.

Local companies raised 11.9 trillion won ($10.5 billion) last month by issuing stocks and bonds, compared with 10.8 trillion won a month earlier, according to the Financial Supervisory Service (FSS).

Shares sold by local firms reached 214.9 billion won last month, up 26.7 percent on-month, with IPOs more than doubling to 110.1 billion won. However, rights offerings fell 16.1 percent to 104.8 billion won, the FSS said.

The cumulative amount of the firms' direct financing came in at 78.3 trillion won in the January-July period, down 5 percent from a year earlier.

The on-month dip came as local businesses have suffered a slump on a global economic downturn, the FSS said. It also noted the on-year decrease is attributed to the fact that large-scale rights offerings, worth a combined 3 trillion won, by two major financial firms took place last year.

Corporate bond issuances reached 11.7 trillion won in July, up 9.2 percent from the previous month, with those excluding debts sold by financial firms and asset-backed securities surging 41.2 percent to 6.42 trillion won, according to the regulator.

"Despite the jittery market conditions, companies opted to secure funds by selling corporate bonds thanks to the central bank's rate cut," a FSS official said.

The Bank of Korea lowered its key interest rate by a quarter percentage point to 3.00 percent in July, for the first time in more than three years. (Yonhap News)