Direct finance all the rage among local corporations

Korean companies’ direct financing jumped in October from a month earlier as corporate share issuances climbed on the back of increased public offerings (IPOs), the financial watchdog said yesterday.

Local firms raised 12.7 trillion won ($11 billion) last month by issuing stocks and bonds, up 22.5 percent from 10.4 trillion won in September, according to the Financial Supervisory Service.

In the January-October period, local companies’ direct financing jumped 11.9 percent on-year to 115.7 trillion won, the regulator added.

The October increase was largely attributed to a steep climb in stock issuances, such as public offering and paid-in increases.

Equities sold by companies totaled 361.9 billion won, more than tripling from 109 billion won in the previous month.

“Companies that had delayed their trading debuts amid global uncertainties resumed their IPOs on the back of a recovery in the local stock market,” the FSS said, noting that six companies went public in October, compared with just one in the previous month.

The FSS added that the local IPO market remains sluggish compared with last year.

The FSS also said that corporate bond issuances jumped 20.3 percent on-month to 12.4 trillion won as companies increased corporate bond sales in a bid to secure liquidity ahead of a series of bond maturities in the first half of next year.

The recent deepening crisis in Europe has led companies and financial institutions to rush to secure liquidity.

Yonhap