[Edaily Marketin KIM YEON-SEO Reporter] Amid a continued trend of net redemptions—where redemptions exceed new issuances—in the corporate bond market, Shinhan Investment Securities and GS Entec are set to conduct bookbuilding this week for public offerings of corporate bonds. With few companies currently issuing bonds, Shinhan Investment Securities, buoyed by the securities industry’s boom, is seeking to raise up to 500 billion won.

According to the investment banking (IB) industry on the 5th, Shinhan Investment Securities (AA0) and GS Entec (A0) will conduct bookbuilding among institutional investors this week (July 6–10) to issue corporate bonds.

Shinhan Investment Securities will conduct a bookbuilding process on the 7th to issue corporate bonds totaling 250 billion won. The tranches (maturities) consist of a 2-year tranche worth 150 billion won and a 3-year tranche worth 100 billion won. Depending on the results of the bookbuilding, the company plans to increase the issuance amount to a maximum of 500 billion won.

The target yield band for both the 2-year and 3-year tranches has been set at -30 to +30 basis points (bps; 1 bp = 0.01 percentage points) relative to the ratings assigned by private bond rating agencies. NH Investment & Securities and Samsung Securities are serving as lead underwriters. The scheduled issuance date is the 15th.

Shinhan Investment Securities is expected to secure investment demand amid an improving securities market environment. With expectations for securities firms’ earnings rising due to factors such as recent increases in stock market trading volume, institutional investors’ interest in AA-rated securities bonds is also expected to continue.

GS Entec will conduct a bookbuilding process on the 8th for the issuance of corporate bonds totaling 35 billion won. The offering consists of 20 billion won in 2-year bonds and 15 billion won in 3-year bonds, with no plans for an oversubscription. The target yield band is -30 to +30 basis points relative to the individual market average yield. NH Investment & Securities, KB Securities, and Korea Investment & Securities are serving as lead underwriters. The scheduled issuance date is the 16th.

GS Entec’s corporate bonds are backed by a principal and interest payment guarantee from GS Global. Accordingly, GS Entec is expected to secure investor demand based on the stability provided by this guarantee rather than its own creditworthiness.

Corporate bond issuance has been on a downward trend recently. According to the Financial Supervisory Service, corporate bond issuance in May totaled 18.7813 trillion won, a 15.4% decrease from the previous month’s 22.2021 trillion won. General corporate bonds saw a net redemption of 422 billion won, continuing the trend of net redemptions seen so far this year.

The credit industry believes that investor sentiment toward corporate bonds will not recover easily for the time being. This is because the possibility of rising interest rates remains, and credit spreads could widen further if the supply of investment-grade corporate bonds continues. Accordingly, experts advise that rather than recklessly expanding investment portfolios, investors should focus on selective investments in top-rated corporate bonds with high financial stability and solid fundamentals.

Kim Sang-in, an analyst at Shinhan Investment Securities, stated in a report, “Demand recovery remains sluggish due to lingering upside risks to interest rates, and the continued supply of top-tier corporate bonds could widen credit spreads, so caution is warranted.” He added, “We recommend investing in top-rated corporate bonds, which are expected to outperform in the second half of the year due to low supply-demand pressures and solid fundamentals.”