Corporate bond and share issuance drops more than W10tr in August

Corporate share and bond issuance fell more than 10 trillion won ($7.35 billion) in August from the previous month, as the summer vacation season's typical slowdown combined with persistent high interest rate pressures to weigh on financial bond issuance, while a base effect from Hanwha Solutions' large-scale rights offering in July further shrank equity issuance.

According to the Financial Supervisory Service's report on corporate direct financing in August 2026, released Wednesday, public share issuance last month totaled 454.9 billion won, down 1.04 trillion won, or 69.5 percent, from the prior month's 1.49 trillion won. The number of issuances rose to 12 from seven the previous month.

Rights offerings in August came to 294.3 billion won, a drop of 1.14 trillion won, or 79.4 percent, from July. The sharp decline reflected a base effect from Hanwha Solutions' 1.17 trillion won rights offering in July, which had sent equity issuance jumping that month.

Initial public offerings, by contrast, picked up, with six companies listing on Kosdaq for a combined 160.6 billion won. That compared with two listings worth 61.6 billion won the previous month, representing an increase of four deals and 99 billion won, or 160.7 percent.

Public corporate bond issuance also fell, dropping 36.1 percent, or 8.97 trillion won, from the prior month to 15.88 trillion won. General corporate bonds came in at 310 billion won, down 2.47 trillion won, or 88.8 percent, from July. All issuances were for refinancing purposes; none were for operating or facility needs.

By credit rating, A-rated bonds accounted for 71.4 percent of issuance and BBB-rated or below made up the remaining 28.6 percent. There were no issuances rated AA or above, compared with AA-and-above bonds making up 86.3 percent of the total the previous month.

The decline was most pronounced in financial bonds. Financial bond issuance last month totaled 14.81 trillion won across 173 transactions, down 7.04 trillion won, or 32.2 percent, from 21.86 trillion won across 263 transactions in July. The number of deals fell by 90.

By type, bonds issued by credit card companies, installment finance firms and securities firms — categorized as other financial bonds — fell the most, dropping 5.22 trillion won. Bank bonds and financial holding company bonds declined by 1.08 trillion won and 740 billion won, respectively.

Analysts attributed the decline to a combination of seasonal factors — corporate bond issuance typically slows in August due to the summer holiday period — and the continued burden of high interest rates on companies.

Asset-backed securities bucked the trend, rising to 752.4 billion won across 89 deals, up 536.9 billion won, or 249.1 percent, from 215.5 billion won across 29 deals the previous month.

The total outstanding balance of corporate bonds at the end of August stood at 768.85 trillion won, up 1.9 trillion won from 766.95 trillion won at the end of July. General corporate bonds saw net repayments of 936 billion won last month.

Issuance of commercial paper and short-term bonds totaled 149.07 trillion won, down 26.11 trillion won, or 14.9 percent, from 175.17 trillion won in July.

Commercial paper fell 9.15 trillion won, or 16.5 percent, to 46.25 trillion won, while short-term bonds declined 16.95 trillion won, or 14.2 percent, to 102.82 trillion won.

The drop came as securities firms scaled back short-term funding they had raised to secure margin deposits in preparation for stock market volatility.

The outstanding balance of commercial paper at the end of August reached 251.8 trillion won, up 2.14 trillion won, or 0.9 percent, from 249.66 trillion won at the end of the prior month. The outstanding balance of short-term bonds, however, fell 3.96 trillion won, or 4.0 percent, to 95.19 trillion won from 99.15 trillion won.