A massive amount of Korea’s builders and shippers’ corporate bonds will come due in the second quarter of next year
November 30, 2013 Leave a comment
$39 billion corporate debt to mature next year
2013.11.28 16:26:22
Over 41 trillion won ($38.6 billion) worth of corporate bonds in South Korea are due to mature next year. A massive amount of the country’s builders and shippers’ corporate bonds will come due in the second quarter of next year, which will pressure marginal firms to raise funds. A total of 41.2 trillion won of corporate bonds will come due in 2014, according to sources in the financial investment industry and Samsung Securities Thursday. The amount is up 2.5 trillion won from 38.7 trillion won this year. By grade, AA grade corporate bonds take up the highest portion with 16 trillion won, followed by A grade with 12.6 trillion won, AAA grade with 6.6 trillion won and BBB grade with 3.2 trillion won.
24.2 trillion won worth of debts are to mature in the first half, higher than 17 trillion won in the second half.
On a monthly basis, February will see the highest maturity amount of 5.6 trillion won, followed by April 4.6 trillion won, May 4.5 trillion won, January 3.5 trillion won and November 3.4 trillion won.
Excluding AA grade bonds where 2.4 trillion will come due in April, all of the corporate bonds will come due most in February – AAA grade 1.1 trillion won, A grade 2.4 trillion won and BBB grade 500 billion won.
After the STX and Tong Yang scandals, most of investors turned their back on A grade or below bonds, differentiating investment grade debt from speculative grade debt further.
Min Dong-won, researcher at Hyundai Securities, noted, “2014 will be the year bad for corporate bond market,” adding, “corporate bond spread could likely go up, prompted by rise in treasury bond’s interest rate and the maturity amount is massive, which will be unfavorable in terms of demand and supply.”
The investment sentiment, which prefers blue-chip corporate bonds to shipbuilder, offshore companies and constructors` corporate bonds regardless of credit rating, will hardly turn around next year. February will see the highest maturity amount but the second quarter, the period when most of their maturity dates are concentrated, will experience the biggest crisis, experts expected.
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