Sales of commercial papers (CP) in South Korea surged more than 34 percent on-month in March as brokerages rushed to secure cash to brace for the fallout from the novel coronavirus outbreak, data showed Thursday.

The country's CP issuance came to 21.2 trillion won ($17.4 billion) last month, up 34.2 percent from the previous month's 15.8 trillion won, according to the data from the Korea Securities Depository.

Securities companies led the sharp increase in March sales of CP, a short-term debt instrument.

Shinhan Investor Corp. was the leading CP issuer in March with 1.3 trillion won, up 26 times the number from February. Korea Investment & Securities Co. followed with 1.01 trillion won, and Mirae Asset Daewoo Co. with 1 trillion won.

Market watchers said local brokerage houses scrambled to raise funds last month to gird for a possible liquidity crunch stemming from the novel coronavirus pandemic.

Concerns have arisen that the fast spread of COVID-19 has made domestic and global financial markets more volatile, weighing down on brokerages' profitability, capital adequacy, funding and liquidity.

Moody's Investors Service said Wednesday that it is reviewing six South Korean securities firms, including KB Securities Co., for a possible credit downgrade in the face of the coronavirus pandemic.

Meanwhile, CP sales have recently firmed up as government measures to stabilize the local bond market went into full gear. CP issuance came to 4.1 trillion won in the first week of April, down 31 percent from the prior week.

South Korea has set up a 10 trillion-won bond market stabilization fund in an effort to tackle financial turmoil caused by the coronavirus outbreak. (Yonhap)