As the semiconductor tilt in Korea's stock market continues, centered on Samsung Electronics and SK hynix, investors' concerns are growing. With the indexes swinging sharply, the importance of strategies to diversify and efficiently manage idle cash alongside has increased.
In this environment, commercial paper has drawn attention as a strategy to manage surplus funds in the short term. In a market with high volatility, investors can allocate part of their cash to commercial paper while waiting for buying opportunities in stocks. Interest is especially strong in the commercial paper issued by KB Securities, which has a high credit rating.
Commercial paper is a short-term financial product with a maturity within one year, issued on the issuer's own credit. Investors deposit funds for a set period and receive principal and returns according to the yield promised by the issuer. It is suitable for investors seeking higher yields than deposits while putting money to work within a year.
KB Securities is drawing attention in particular because it holds a high credit rating. As a brokerage under KB Financial Group, KB Securities has an AA+ credit rating. Because commercial paper is not covered by deposit insurance, investors should scrutinize the issuer's credit rating as carefully as the expected yield.
KB Securities also offers a wide range of product types. In addition to on-demand, term-based, and CMA commercial paper-type products, KB Securities sells step-up and installment commercial paper products.
The on-demand type is suitable for investors who want to manage short-term idle funds flexibly, while the term-based type has a fixed investment period but can offer higher yields. The CMA commercial paper type can handle small amounts, making it highly useful as a tool to manage funds waiting for investment.
The installment commercial paper has an automatic redemption structure when the 12-month accumulation period ends; it accumulates a one-month maturity commercial paper on a monthly compounding basis for 12 months.
The step-up commercial paper applies tiered yields; even if redeemed early, the yields applied up to the prior tiers are maintained, and only the current round is subject to the early redemption yield. It is advantageous for investors who find it hard to set an investment period but want to manage funds for a certain duration.
As of the 25th, the yields for KB Securities' won-denominated commercial paper for retail clients are 2.10% per year for on-demand, 2.10% per year for 1 month under the term-based type, 2.70% for 3 months, 3.20% for 6 months, and 3.60% per year for 9 and 12 months.
For step-up commercial paper, the three-month unit product applies 2.70% per year for the first round, 3.20% for the second, and 3.60% for the third to fourth rounds, while the six-month unit product applies 3.20% per year for the first round and 3.60% for the second. The installment commercial paper is around 4.00% per year. Yields are before tax and may change with market rates, corporate bond rates, and the issuer's funding conditions.
There are caveats. Commercial paper reflects the issuer's credit risk, and if the issuer's financial condition worsens, principal losses may occur. Investors should consider not only the indicated yields but also the issuer's credit rating, investment period, early redemption terms, and their own fund management objectives.
KB Securities plans to strengthen marketing tailored to each client's fund management needs in the commercial paper market going forward, based on credit quality and product competitiveness.