The Financial Supervisory Service is reviewing whether JoongAng Group affiliates properly issued corporate bonds and commercial paper (CP). With JoongAng Group entering court receivership recently and its finances worsening, the agency plans to focus on whether there were any problems in the process of selling the bonds to individual investors.
Lee Chan-jin, governor of the Financial Supervisory Service, said at a regular press briefing at the Financial Supervisory Service headquarters on the 22nd, "We plan to begin a review of whether JoongAng Group's corporate bonds or CP were issued appropriately," adding, "If necessary, we can escalate it to an inspection."
In particular, the agency plans to examine whether securities firms sold the bonds to individual investors while aware of JoongAng Group's financial condition. Lee said, "From the investor's standpoint, what feels unfair is that even shortly before the default, (the corporate bonds) appear to have been issued and sold at retail to individual investors," adding, "We will inspect how they were sold."
In fact, JoongAng Group affiliates issued public corporate bonds this year as well. JTBC publicly issued its 42nd unsecured bonds worth 93 billion won in February. The coupon at the time was 8.1% annually, and Korea Ratings and NICE Investors Service assigned a BBB rating. The lead manager was Shinhan Investment & Securities. As of the end of last year, JTBC's liability ratio was 2,632%.
JoongAng Ilbo also issued public corporate bonds worth 50 billion won this year. The coupon was 7.1% annually, and Korea Ratings and NICE Investors Service gave a BBB rating. The lead manager is NH Investment & Securities. As of the end of last year, JoongAng Ilbo's liability ratio was 312%. Generally, when the liability ratio exceeds 200%, the financial burden is considered high.
JoongAng Ilbo said, "The public bond issued in February this year received a credit rating of "BBB0 (stable)" based on results such as 13 consecutive years of operating profit," adding, "We view the current liquidity crunch as a temporary phenomenon caused by the transfer of affiliate risk, not a deterioration in the core business's competitiveness."