Firms’ direct financing drops 10.4% in Dec.

Korean companies’ direct financing shrank 10.4 percent in December from a month earlier due to a drop in corporate bond sales, the financial regulator said Monday.

Local firms raised a total of 9.4 trillion won ($8.4 billion) through sales of stocks and bonds last month, compared with 10.5 trillion won in November, the Financial Supervisory Service (FSS) said in a report.

The decline came due to companies’ traditional reluctance to avoid bond sales in the last month of every year due to accounting reasons, the FSS said.

During December, companies sold a total of 2.1 trillion won of new and existing shares, up 204.6 percent on-month, while issuing 7.3 trillion won debts, compared with 9.8 trillion won a month earlier, according to the FSS.

For the whole of 2010, companies raised a combined 123.3 trillion won in direct financing, modestly less than 126.6 trillion won in 2009, the regulator noted.

The year 2010 marked the second straight year in which companies’ annual direct financing topped the 120-trillion-won mark while the corresponding figures remained below 100 trillion won for 2008 and the previous years, the FSS added.

“The expansion in direct financing seems attributable to companies’ preference to securities issuance thanks to stock rallies and a downtrend in interest rates,” the regulator said in the report. 

(Yonhap News)