As Samsung Electronics and SK hynix lead a continued concentration in semiconductors on the domestic stock market, investors' concerns are deepening. With the indexes swinging sharply, the importance of strategies that diversify investments and manage idle cash efficiently is growing.
In this environment, commercial paper issued by securities firms is drawing attention as a strategy to manage spare cash in the short term. In a highly volatile market, investors can park part of their cash in commercial paper while waiting for stock-buying opportunities. Interest is especially high in the commercial paper of KB Securities, which holds a high credit rating.
Commercial paper is a short-term financial product with a maturity of up to one year that the issuer sells on its own credit. Investors deposit funds for a set period and receive principal and returns based on the yield promised by the issuer. It suits investors seeking higher yields than deposits while rolling funds within one year.
KB Securities stands out in particular for its high credit rating. The credit rating of KB Securities, a brokerage under KB Financial Group, is AA+. Because commercial paper is not covered by deposit insurance, investors need to 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, fixed-term, and CMA commercial paper products, it also sells step-up and installment commercial paper.
The on-demand type suits investors who want to manage short-term idle cash flexibly, while the fixed-term type has a set investment period but can offer higher yields. The CMA commercial paper type allows even small amounts to be managed, making it highly useful for handling cash on the sidelines.
The installment commercial paper automatically redeems when the 12-month accumulation period ends. It accumulates a one-month-maturity commercial paper for 12 months using monthly compounding.
The step-up commercial paper applies tiered yields. Even if redeemed early, the yields applied up to the previous tier are maintained, and only the current period is subject to the early redemption yield. It benefits investors who find it hard to fix an investment horizon but want to manage funds for a certain period.
As of the 25th, the yields on won-denominated commercial paper for individual clients at KB Securities are 2.10% per year for on-demand, 2.10% per year for one month fixed-term, 2.70% per year for three months, 3.20% per year for six months, and 3.60% per year for nine and 12 months.
For step-up commercial paper, the three-month-interval product applies 2.70% per year for the first period, 3.20% per year for the second, and 3.60% per year for the third to fourth; the six-month-interval product applies 3.20% per year for the first period and 3.60% per year for the second. The installment commercial paper is around 4.00% per year. Yields are before tax and may vary depending on market interest 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 deteriorates, principal losses may occur. Investors should consider not only the quoted yield but also the issuer's credit rating, investment period, early redemption terms, and their own cash management objectives.
KB Securities plans to strengthen marketing tailored to customer-by-customer cash management needs in the commercial paper market, based on its credit quality and product competitiveness.