Direct financing by South Korean companies sank 29.3 percent in May as firms refrained from raising money in sluggish stock and bond markets, the financial regulator said Wednesday.
Local companies raised a total of 8.85 trillion won (US$7.60 billion) last month by selling stocks and bonds, compared with the 12.5 trillion won the previous month, according to the Financial Supervisory Service (FSS).
In the first five months of this year, corporate direct financing dropped to 49.5 trillion won from 56.2 trillion won a year ago, the FSS added.
The on-month drop in corporate direct financing came as companies stayed away from securing money through selling stocks and bonds due to the persistent market slump, the regulator said.
Companies' stock sales tumbled 75.5 percent to 113.4 billion won in May from 462.7 billion won a month earlier, largely due to lack of demand. There were only two initial public offerings (IPOs) on the main and secondary bourses worth a combined 37.7 billion won, with six cases of rights offerings amounting to 75.7 billion.
Corporate bond issuances reached 8.74 trillion won in May, down 27.6 percent from 12.7 trillion won the previous month, as high-rated large firms reduced debt sales due to jittery business conditions, the FSS said.
In a bid to beef up the faltering corporate bond market, the Financial Services Commission (FSC), the country's policy-making financial watchdog, said Tuesday it will draw up a set of measures aimed at fueling sales of corporate bonds to help companies secure liquidity. (Yonhap News)
