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S.Korea's corporate financing shrinks 19.3 pct in May

06-21-2012 10:15 BJT

SEOUL, June 21 (Xinhua) -- South Korean companies'direct financing through issuing stocks and bonds shrank 19.3 percent last month due to a drop in bond issuance by non-financial companies, the financial watchdog said Thursday.

Corporate financing through public offers such as equity issuance and bond sales amounted to 8.31 trillion won (7.22 billion U.S. dollars) in May, down 19.3 percent from a month earlier, according to the Financial Supervisory Service (FSS). Cumulative funding-raising for the first five months of this year reached 55.25 trillion won, down 9.3 percent from the same period last year.

The May drop was mainly attributed to a sharp fall in bond sales by non-financial companies. Industrial firms secured money by preemptively floating bonds ahead of the tighter regulation.

Starting April, securities must be offered through a book building process by which an underwriter attempts to determine the number of shares and the price based on demand from institutional investors.

Debt financing, or bonds issued by industrial companies and financial firms, dropped 20 percent on-month to 8.19 trillion won in May. Bond sales by industrial companies plunged 66.3 percent to 1.58 trillion won, the lowest since October 2008, but financial bond issuance jumped 70.5 percent to 2.31 trillion won due to massive sales by credit card companies.

Equity financing, including initial public offering (IPO) and rights offering, jumped 104.5 percent on-month to 117.4 billion won in May. There was no IPO last month, but the rights offering surged 200.3 percent over the cited period.

Editor:Wang Xiaomei |Source: Xinhua

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