Firms sold most bonds in months due to cutKorean companies sold the most bonds in October in four months as borrowers sought to lock in lower interest rates on speculation the central bank’s rate cut would be its last this year.
Issuance rose to 5.36 trillion won ($4.91 billion), compared with a 2012 monthly average of 4.78 trillion won, according to data compiled by Bloomberg. NH Financial Group, a unit of National Agricultural Cooperative Federation, led sales with 500 billion won of three- and five-year debt, the data show. Yields on three-year corporate notes with an AA-rating, a benchmark for borrowing costs, fell to an all-time low of 3.23 percent the week of the rate cut.
“Uncertainties regarding the economy and interest rates triggered companies, including some which do not have debt maturing in November or December, to issue bonds,” said Hwang Won-ha, a credit analyst at HMC Investment Securities.
The Bank of Korea said in a report to parliament on Oct. 31 that growth momentum in Asia’s fourth-largest economy is faltering amid global economic uncertainty, and that weak consumer and investor confidence may delay a recovery. Technology provider SK C&C, the only company to offer bonds last week, said it reduced costs because of low interest rates.