This article was displayed on the ChosunBiz MoneyMove (MM) site at 3:34 p.m. on July 31, 2026.
As Korea's stock market repeatedly surges and plunges, increasing volatility, the fundraising market that uses stocks is freezing fast. With share prices unstable, it has become harder to raise money at the originally targeted size, and the burden on securities firms that arrange or invest in the deals has also grown. As a result, stock-linked fundraising transactions such as price return swaps (PRS), rights issues, and convertible bond (CB) offerings are delaying schedules or readjusting sizes, moving to slow their pace.
According to the investment banking (IB) industry on the 2nd, securities firms have recently been discussing with corporations pursuing stock-linked fundraising the option of postponing transaction schedules or adjusting the size of the raises.
Fundraising transactions based on share prices are typically designed on the premise of future corporate value gains. Corporations or existing shareholders secure needed funds on favorable terms, such as by using relatively small amounts of equity, while investors and securities firms expect revenue from future share price rises.
In the case of PRS, a securities firm acquires the underlying shares and then settles gains and losses with the counterparty based on price movements. If the share price rises by maturity, revenue can be earned through share sales or cash-settled differences, but if the price falls, the securities firm's loss risk and the counterparty's settlement burden can both grow. CBs, likewise, are bought by investors expecting arbitrage from future conversion into shares, so when share prices weaken, demand inevitably shrinks.
An IB industry official said, "In the current situation of sharp swings in share prices, corporations find it hard to meet desired amounts, and securities firms also struggle to actively push transactions."
LG Chem raised about 2 trillion won last year through a PRS using equity in LG Energy Solution and had been considering an additional transaction this year. But with LG Energy Solution's share price recently undergoing a sharp correction, slowing the pace of the follow-up transaction has become unavoidable. To secure the same amount of funds, more equity must be used than before, and securities firms also cannot avoid a heavier exit burden going forward.
POSCO Holdings had also been consulting with multiple securities firms on raising funds via PRS using its equity in POSCO FUTURE M and POSCO International, but as share price volatility has grown recently, discussions are said to be slowing.
In particular, POSCO FUTURE M's share price fell about 23.5% from July 1 to 30. Given the drop, to raise the same amount of funds as at the start of the month, about 30.7% more equity would need to be投入 into the PRS transaction than at that time. For POSCO Holdings, that means the burden of locking up more equity to raise the same amount.
A coverage division official at a domestic securities firm said, "A market drop does not completely change our sales strategy itself, but structured transactions premised on share prices, such as PRS or stock-backed loans, inevitably get pushed down the priority list in today's market," adding, "We sometimes propose mezzanine products as an alternative, but many issuers are delaying decisions while watching the market."