In the previous month, capital raised by domestic corporations through direct financing fell by about 5 trillion won from the prior month. The decline was driven by drops across initial public offerings (IPO), rights issues, and corporate bond issuance.
The Financial Supervisory Service said on the 26th that in Oct., funds raised by corporations through the issuance of stocks or corporate bonds totaled 23.705 trillion won, down 4.9891 trillion won (17.4%) 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 financial firms.
Funds raised through stocks in the previous month totaled 93.9 billion won, a sharp drop of 275.9 billion won (74.6%) from the prior month. Two KOSDAQ-listed corporations raised funds, with an average deal size of 26.2 billion won, well below the prior month's average of 60.8 billion won. In rights issues as well, both cases were small offerings by KOSDAQ corporations, reducing both the number of deals and the amount raised.
Corporate bonds issued amounted to 23.6111 trillion won, down 4.7132 trillion won (16.6%) from the prior month. Ordinary corporate bonds were issued in 32 deals totaling 3.555 trillion won, a 37.8% decrease over the period. By use of proceeds, the share of bond issuance for refinancing and operations fell from 77.2% to 72.7% and from 18.5% to 16.6%, respectively, while issuance for facilities rose from 4.4% to 10.7%.
Financial bonds issued totaled 18.2309 trillion won, a decrease of 2.4409 trillion won (11.8%) over the period. Total outstanding corporate bonds reached 750.0447 trillion won, up by more than 8 trillion won from the prior month. They have been steadily increasing since Jun. last year.
Commercial paper (CP) and short-term bonds issuance totaled 137.6459 trillion won in the previous month, down 12.3867 trillion won (8.3%) from the prior month. Over the period, CP decreased by 3.3349 trillion won and short-term bonds by 9.0518 trillion won.