South Korean companies' direct financing through issuing stocks and bonds shrank 21.7 percent last month due to a drop in corporate bond issuance caused by tighter regulation, the financial watchdog said Sunday.
Corporate financing through public offers such as equity issuance and bond sales amounted to 10.3 trillion won (8.8 billion U.S. dollars) in April, down 21.7 percent from a month earlier, according to the Financial Supervisory Service (FSS).
For the first four months of this year, the fund raising reached 46.93 trillion won, down 3.4 percent from the same period of last year.
The April drop was mainly attributed to tougher requirement for bond issuance that was effective last month. Local companies secured money by preemptively floating bonds ahead of the April implementation of the tighter regulation, the watchdog said.
Debt financing, or bonds issued by industrial companies and financial firms, dropped 21.2 percent on-month to 10.24 trillion won in April. Bond sales by industrial companies sank 25.5 percent to 4.71 trillion won, and sales by financial institutions declined 32.8 percent to 1.36 trillion won. The issuance of asset-backed securities (ABS) retreated 36 percent to 1.45 trillion won.
Equity financing, including initial public offering (IPO) and rights offering, plunged 66.3 percent on-month to 57.4 trillion won in April. The IPO retreated 61 percent to 18.3 billion won, and the rights offering dropped 68.3 percent to 39.1 billion won./.