DLS issuance hits W15.9tr in H1, up 18.7% from prior half

Issuance of derivative-linked securities, or DLS, reached nearly 15.9 trillion won ($10.8 billion) in the first half of this year, rising 18.7 percent from the previous half-year period.

The Korea Securities Depository said Monday that DLS issuance totaled 15.9 trillion won in the first half — up 18.7 percent from 13.39 trillion won in the second half of last year and up 29.1 percent from 12.32 trillion won in the first half of last year.

Of the total, derivative-linked bonds, or DLB, accounted for 13.62 trillion won, rising 22.5 percent from the previous half and 28.6 percent from the same period a year earlier. The number of issuances reached 1,328, up 4.0 percent year on year.

By issuance type, private placements totaled 13.14 trillion won, making up 82.6 percent of the total. Public offerings stood at 2.76 trillion won, or 17.4 percent.

By underlying asset, interest rate-linked DLS led with 12.71 trillion won, accounting for 79.9 percent of total issuance. Credit-linked products followed at 1.72 trillion won (10.8 percent), with exchange rate-linked products at 816.6 billion won (5.1 percent).

DLS redemptions in the first half totaled 12.7 trillion won, up 11.7 percent from 11.37 trillion won in the previous half. By redemption type, maturity redemptions accounted for 10.43 trillion won, or 82.1 percent of the total. Early redemptions stood at 1.54 trillion won (12.1 percent), while mid-term redemptions came to 732.1 billion won (5.8 percent).

The outstanding DLS balance as of the end of last month stood at 42.34 trillion won, up 11.1 percent from 38.12 trillion won at the end of last year. Of that, the outstanding DLB balance totaled 36.5 trillion won.

DLS are derivative-linked securities whose returns are tied to non-equity underlying assets such as interest rates, exchange rates, raw materials and credit. They allow for a broader range of product structures than equity-linked securities, or ELS, given their wider variety of underlying assets.