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Corporate Bond Market See Weakened New Year Effect while Earnings Determine Sales

NSP NEWS AGENCY, By Hyun-jin Kim and Soo-in Kang, 2024-03-09 19:12 ENX7
#Bonds #CorporateBonds #CreditSpread #BondMarket #KFIA
NSP통신- (Table = KFIA)
(Table = KFIA)

(Seoul=NSP NEWS AGENCY) = More bonds were issued last month, with clear differences in sales by bond type. Bond specialists diagnosed the cause as the waned “New Year effect” that institutional investors took part in the corporate bond buying spree.

The Korea Financial Investment Association’s OTC Bond Trend for February 2024, released on March 8, says the bond issued last year was 71.8 trillion won, an increase from 7.9 trillion won last month, supported by increased government, write-off, corporate bonds, and ABSs. Among them, corporate bonds were 14.9 trillion won, an increase of 186 billion won, with 5.366 trillion net-issued corporate bonds.

The KFIA stated, “The corporate bond was issued 14.9 trillion won, up by 200 billion won, thanks to the prolonged New Year effect” and added, “Credit spread was shrunken significantly.” Credit spread is the spread required for the corporate bond over the government bond.


The spread between AA- 3-year corporate and government bonds was shrunk from 159 bp in December 2022, 81 bp in June 2023, 74 bp in December 2023 to 65 bp in February 2024. The same trend was observed for BBB- 3-year corporate bonds which was 744 bp in December 2022, 719 bp in December 2023, and 702 bp in February 2024 said KFIA.

The demand forecasting for corporate bonds for February ended up with one AA or higher, three As, and one BBB or lower-rated bonds unsold. The percentage of unsold bonds (unsold amount/total issued) was recorded at 1.9%.

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