Corporate direct financing tanks on drop in IPOs

Corporate direct financing in Korea shrank from a month earlier in October due to a sharp drop in initial public offerings, Financial Supervisory Service data showed Tuesday. [YONHAP]

Corporate direct financing in Korea shrank from a month earlier in October due to a sharp drop in initial public offerings (IPOs), Financial Supervisory Service (FSS) data showed Tuesday.

Korean companies raised a combined 19.4 trillion won ($15.06 billion) by selling stocks and bonds last month, down 4.36 trillion won from 23.78 trillion won raised through such means in September, according to the data.

Direct financing refers to raising funds directly from the stock and bond markets without borrowing from banks or other financial institutions.

Stock sales plummeted 84.7 percent from 2.7 trillion won in September to 413 billion won last month.

Domestic firms raised some 226 billion won through 10 IPOs in October, compared to 597.3 billion won raised through nine IPOs the previous month.

Money raised through rights offerings also plunged 91 percent from 2.1 trillion won to 187 billion won over the cited period, according to the FSS.

Bond issues slipped 9.8 percent on-month to 19 trillion won in October from 21.07 trillion won the previous month.

As of the end of October, the value of outstanding corporate bonds came to 632.47 trillion won, up 0.1 percent from a month earlier.

The data showed that businesses issued 40.8 trillion won worth of commercial papers amid a sharp drop in stock and bond issues in October, up 27.7 percent from a month earlier.

They also issued 78.8 trillion won worth of short-term bonds last month, up 17.4 percent from 67.16 trillion won in September.

BY KIM JU-YEON, YONHAP [kim.juyeon2@joongang.co.kr]