The corporate bond issuance market, which had been quiet for some time, has become active again at the start of the new year. With the largest wave of corporate bond maturities in history arriving this year, major companies are moving quickly to refinance their funds.
According to the Korea Exchange, on January 5th, Hanwha Aerospace and POSCO Mirae Technology announced plans to issue corporate bonds totaling 250 billion won each. Lotte Wellfood and Hanwha Investment & Securities also announced plans to raise 200 billion won and 150 billion won respectively. Based on demand forecasts, these companies have reserved the option to potentially double the issuance size. Hanwha Aerospace has already initiated its first demand forecast of the year, and the other companies will follow suit.
The process of companies issuing corporate bonds to raise funds is closely related to market interest rates. Until the end of last year, rapidly rising interest rates put pressure on companies to raise funds, leading to a continued trend of postponing issuances. With the Bank of Korea maintaining a frozen benchmark interest rate and the government expanding the issuance of government bonds, government bond yields exceeded 3%, and corporate bond yields followed suit. Based on a three-year AA- rating, corporate bond yields approached 3.6% at the end of last year. Under this trend, the yield spread between government bonds and corporate bonds also widened significantly.
Affected by rising interest rates and the off-season at the end of the year, corporate bond issuance in the fourth quarter of last year reached only 9.7 trillion won, a significant decrease from 34.1 trillion won in the first quarter. However, the situation is changing as we enter 2026. At the beginning of the new year, institutional investors resumed their fund operations, creating a certain level of demand for corporate bonds. This "new year effect" is stimulating companies to restart issuance.
In particular, the scale of corporate bonds maturing this year reaches a staggering 78.4 trillion won, with approximately 52 trillion won concentrated in the first half of the year. Specifically, 11-12 trillion won worth of bonds are expected to mature in January, February, and April respectively. From a corporate perspective, issuing new corporate bonds is necessary to repay these maturing bonds. In fact, the companies planning to issue corporate bonds this time primarily intend to use the funds for "debt repayment," reflecting this trend.
However, for the corporate bond market to truly recover, interest rate stability is still necessary. Recently, government bond yields have been somewhat stable due to factors such as government intervention in the foreign exchange market, which may have a positive impact on investor sentiment. Furthermore, foreign capital inflows resulting from inclusion in the World Government Bond Index and increased fundraising by securities firms are also considered factors that may support demand for corporate bonds.
This situation is likely to lead to a trend of corporate bond issuance being concentrated in the first half of the year in the short term. In particular, with the official commencement of demand forecasting by various companies after January 8th, the market atmosphere may become even more active. Experts predict that the issuance volume this year may still be adjusted according to interest rates and demand conditions, but issuance activities to cope with maturing bonds are expected to remain active in the first half of the year.
