iM Securities will issue 150 billion won in contingent convertible bonds (perpetual bonds) to shore up its equity capital. Based on the capital secured, the company plans to expand bond trading, over-the-counter derivatives, brokerage, and investment banking (IB) to strengthen its competitiveness as a mid-sized securities firm.
iM Securities said on the 9th that it will issue a total of 150 billion won in contingent convertible bonds this month. The bonds will be issued in two tranches of 60 billion won and 90 billion won, each with a maturity of 30 years. The coupon rates are 5.90% and 5.68% per year, with interest paid every three months.
Legally bonds, contingent convertible bonds are capital-like securities that are recognized as equity in accounting. They have set maturities, but the issuer can extend them, so they are used as a representative means for securities firms to bolster capital.
The size of this issuance is about 13% of total equity on a consolidation basis in the first quarter this year. Once the capital raising is completed, iM Securities' equity capital will increase to about 1.29 trillion won, and its net capital ratio (NCR) is expected to improve to 478%, up 98 percentage points from before.
The company plans to use the increased capital to expand its business portfolio. It will strengthen its trading operations in bonds and over-the-counter derivatives, expand brokerage, and focus investment banking (IB) and project financing (PF) on large, high-quality deals to enhance sales competitiveness.
An iM Securities official said, "The issuance of contingent convertible bonds is part of a capital increase to establish a foundation for sustainable growth," adding, "We will enhance our sales competitiveness by efficiently using the capital secured through proactive risk management."
The official added, "By strengthening capital adequacy, we expect to regain our market position as a mid-sized securities firm and further enhance our business competitiveness."