Korean firms target $5 bn in bond sales as credit spread hits 14-mth low

The credit spread between 3-year government bonds and AA-rated corporate debts stands at 0.48 percentage point

(Courtesy of Getty Images)
(Courtesy of Getty Images)
Jeong-Cheol Bae 2
2025-08-21 17:37:12 bjc@hankyung.com
Debt financing

South Korean companies are ramping up bond offerings ahead of the Korean Thanksgiving holiday in early October, taking advantage of falling interest rates and robust demand from individual investors.

Their combined debt issues are projected to reach 6.7 trillion won ($4.8 billion) between August and September, marking a sharp uptick in their fundraising activity.

With the country’s policy rate standing at 2.5% following the Bank of Korea’s interest rate cuts since October last year, the credit spread between three-year treasuries and corporate bonds has narrowed to its smallest since June 2024.

A surge in demand led to oversubscription not only for blue-chip companies, but also for B-rated debt and a coal-fired power plant operator, largely shunned by institutional investors due to environmental, social and governance (ESG) concerns.

SK Innovation Co., an intermediary holding company of SK Group, plans to issue 600 billion won in bonds next week – its first fundraising following its announcement of a merger between battery maker SK On Co. and lubricant producer SK Enmove Co.

The bond sale, aimed at repaying debt, will serve as a gauge of the company’s credit standing ahead of its two units’ combination in November.

The following is a list of companies that plan to sell bonds between August and September.


Company name Credit rating Target amount (won) Bookbuilding date
Hyundai Engineering & Construction Co  AA- 400 billion Aug. 26
Hanwha Corp. A+ 300 billion Sept. 1
Hyundai Transys Co. AA- 150 billion Aug. 15


Meanwhile, Hyundai Steel Co., a unit of Hyundai Motor Group, is weighing bond issues to fund its construction of a US steel mill.


The following is a list of companies that have issued bonds in August.

Company name Credit rating Amount (won) Bids (won)
Dongwon F&B Co. A+ 120 billion 730 billion
SK Inc. AA+ 450 billion 990 billion
Samcheok Blue Power Co. A+ 60 billion 132 billion
Doosan Fuel Cell Co. BBB 45 billion 63 billion

With corporate borrowing costs dropping, the spread between the yields of three-year treasuries and AA-rated corporate bonds narrowed to 0.48 percentage point on Aug. 20, a 14-month low.

The spread had hovered between 0.5 and 0.6 percentage point over the past year.

 
Write to Jeong-Cheol Bae at bjc@hankyung.com
Yeonhee Kim edited this article.
#SKInnovation #corporatebonds #SKOn #SKEnmove #HyundaiEngineeringandConstruction #Hanwha #HyundaiTransys #DongwonF&B #BankofKorea #SamcheokBluePower #DoosanFuelCell #Koreancorporatebonds

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