This photo shows the headquarters building of SK Group in downtown Seoul on Aug. 25, 2020. (Yonhap)
SEOUL, Nov. 4 (Korea Bizwire) — SK Group, South Korea’s second-largest conglomerate by assets, is set to issue its first commercial papers (CPs), indicating that even large companies are having difficulty raising funds through the issuance of corporate bonds.
SK Inc., the holding company of SK Group, plans to issue three-year and five-year maturity CPs worth 100 billion won (US$70 million) each on Nov. 10, at interest rates of 5.629 percent and 5.745 percent, respectively.
The proceeds will be used to repay 60 billion won and 140 billion won CPs maturing on Nov. 17 that were issued in June and July, respectively.
The soon-to-be-issued CPs received the highest crediting rating of A1 from all three credit rating agencies.
In general, pension funds and asset management companies are major investors in corporate bonds.
However, when it comes to CPs, trust departments of securities firms are major investors.
Taking the increased volatility of the capital market into consideration, SK added long-term CPs to its fund-raising options and lengthened the maturity structure.
In recent days, even companies with sound credit ratings have failed to secure investment demand in the corporate bond demand forecast, with the bond issuance interest rate being fixed at the upper end of the band.
M. H. Lee (mhlee@koreabizwire.com)
