SEOUL - Corporate direct financing in South Korea saw a significant decrease in October, primarily due to a sharp decline in initial public offerings (IPOs).
According to Yonhap News Agency, local companies raised a total of 19.4 trillion won (approximately US$15.06 billion) through stock and bond sales in October, marking a decrease from September's 23.78 trillion won.
Direct financing, which involves raising funds directly from stock and bond markets instead of through loans from banks or other financial institutions, experienced a noticeable downturn last month. The data showed that stock sales plummeted by 84.7 percent, from 2.7 trillion won in September to just 413 billion won in October.
In terms of IPOs, October saw local companies raising about 226 billion won through 10 IPOs, a decrease from the 597.3 billion won raised through nine IPOs in September. Additionally, funds raised through rights offerings also experienced a significant drop of 91 percent, from 2.1 trillion won in September to 187 billion won in October.
The bond market did not escape the downward trend either, with bond issues decreasing by 9.8 percent month-on-month, from 21.07 trillion won in September to 19 trillion won in October. However, the overall value of outstanding corporate bonds was slightly up by 0.1 percent at the end of October, totaling 632.47 trillion won.
Despite the decline in stock and bond issues, there was an increase in the issuance of commercial papers, which rose by 27.7 percent to 40.8 trillion won in October. Moreover, the issuance of short-term bonds also saw an upward trend, with 78.8 trillion won worth of bonds issued last month, a 17.4 percent increase from the 67.16 trillion won in September.