SK to issue long-term commercial paper in frozen corporate bond market

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This photo shows the SK Group headquarters in downtown Seoul on August 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 struggling to raise funds through issuance corporate bonds.

SK Inc., the holding company of SK Group, plans to issue three- and five-year CPs worth 100 billion won ($70 million) each on November 10, at interest rates of 5.629% and 5.745%, respectively.

The proceeds will be used to repay 60 billion won and 140 billion won of CP maturing on Nov. 17 that were issued in June and July, respectively.

The soon-to-be-issued PCs have received the highest credit rating of A1 from all three rating agencies.

In general, pension funds and asset management companies are the main investors in corporate bonds.

However, when it comes to PCs, the trust departments of securities companies are the primary investors.

Recognizing increased capital market volatility, SK added long-term CPs to its fundraising options and lengthened the maturity structure.

In recent days, even companies with good credit ratings failed to secure investment demand in the corporate bond demand forecast as the bond issuance interest rate was set at the upper end of the range.

M. H. Lee (mhlee@koreabizwire.com)


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