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By Scott Murdoch
SYDNEY (Reuters) – South Korean firms have issued a file quantity of greenback bonds to this point this 12 months, as they lock in funding to pay for abroad enlargement plans and buyers seek for an alternate given the dearth of Chinese language bond issuance.
Greater than $15 billion value of bonds have been issued since Jan. 1, in keeping with LSEG information, a 30% improve on the identical time final 12 months.
January in Korea is usually a historically busy month for bonds, in keeping with bankers, however the rush of offers has surpassed expectations as firms benefit from a present constructive sentiment amongst buyers in the direction of Korea.
Expectations of upper rates of interest prompted some Korean corporates to shelve offers in 2023 however upcoming funding wants have prompted the transactions to be revived this 12 months, bankers stated.
China’s offshore bond offers have fallen sharply as its actual property sector, a key issuer of greenback bonds, stays in disaster and the nation’s economic system nonetheless recovers from the pandemic.
“Korea is a really well-liked credit score throughout completely different cycles… The nation is AA rated, its issuers are both AA, A or BBB class,” Daniel Kim, HSBC’s co-head of debt capital markets for Asia Pacific, stated.
“Within the present surroundings, the place there may be loads of uncertainty and macro noise, Korea is seen as a secure haven for lots of buyers to place their cash into.”
SK Hynix, the world’s second largest reminiscence chip maker was one of many greatest Korean firms to faucet markets this 12 months because it raised $1.5 billion in a two-tranche deal final month that obtained orders value $6.5 billion.
Korean offers accounted for 44% of greenback bonds issued throughout the Asian area, not together with Japan and Australia, the place the worth of transactions is down 10% 12 months so far, in keeping with the LSEG information.
“I feel the tempo may be maintained,” stated Rishi Jalan, Citi’s head of Asia Debt Syndicate, referring to the file begin to 2024.
“Our total quantity expectations are much like 2023 for this 12 months, so round $30 to $40 billion. We’re not anticipating to see any materials decline.”
The enlargement of South Korea’s battery makers into markets like america is anticipated to require these firms to proceed to want to faucet funding markets for the remainder of the 12 months.
“Continued progress within the Korea battery sector would require important funding and financing,” Youn Sung Whang, Financial institution of America’s head of Korea capital markets, stated.
“That is more likely to come through the US greenback bond market as these issuers additionally look to diversify their investor bases.”
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