In the previous month, capital raised by domestic corporations through direct financing fell sharply. Compared to the prior month, when large initial public offerings (IPO) and paid-in capital increases took place, the amount of stock issuance alone fell by more than 80%.
The Financial Supervisory Service said on the 22nd that funds raised by corporations by issuing stocks or corporate bonds in Aug. totaled 19.5158 trillion won, down 8.7326 trillion won (about 30.9%) from the prior month.
Direct financing refers to a method in which a company raises funds by issuing stocks or bonds directly without going through a financial company.
The size of funds raised through stocks in the previous month was 886.2 billion won, down 3.9273 trillion won (81.6%) from the month before. IPOs fell 333.1 billion won (52.9%) from the prior month, and paid-in capital increases fell 3.5942 trillion won (85.9%). There were no large IPOs, and a relative decline was seen due to the impact of large paid-in capital increases by Hanwha Aerospace and POSCO FUTURE M in the prior month.
General corporate bonds issuance in the previous month was 18.6296 trillion won, down 4.8053 trillion won (20.5%) from the prior month.
Issuance of corporate bonds for operating funds fell over a month from 209 billion won to 47 billion won, and bond issuance for refinancing purposes fell from 2.769 trillion won to 815 billion won. There were no issuances for facility investment purposes for the second straight month.
The FSS explained, "By issuance share, refinancing purposes rose from 93% to 94.5%, while operating purposes edged down from 7% to 5.5%."
Financial bonds issuance was 16.9409 trillion won, down 2.421 trillion won (12.5%) during the period. The total outstanding balance of corporate bonds has increased for 14 consecutive months since Jun. last year, reaching 728.2761 trillion won as of the previous month.
Commercial paper (CP) and short-term bonds issuance in the previous month totaled 133.9838 trillion won, down 488.16 billion won (3.5%) from the prior month. During this period, CP decreased by 8.3161 trillion won, while short-term bonds increased by 3.4345 trillion won.