[Edaily Marketin LEE GEON-EOM Reporter] SK Eco Plant and KCC Corporation(002380)achieved a successful public offering of corporate bonds, drawing a favorable response in the bookbuilding process despite significant uncertainty caused by a slowdown in the construction sector. Market observers agree that this success was not solely due to the “divestment from construction” effect.

While both companies are pursuing business diversification into areas such as IT and electric vehicle materials, analysts note that the decisive factors in persuading institutional investors to open their wallets were SK Eco Plant’s “restructuring of its earnings model following group rebalancing” and KCC Corporation’s “substantial value of its held assets”—two distinct and compelling strengths.

According to the financial investment industry on the 25th, SK Eco Plant and KCC Corporation both succeeded in “under-issuing”—selling bonds at rates below their respective individual average market rates—in the corporate bond bookbuilding conducted this week.

Specifically, SK Eco Plant received orders totaling 987 billion won during the bookbuilding for its public corporate bond offering on the 22nd, which had a total size of 100 billion won. By maturity, demand totaled 290 billion won for the 50 billion won 1-year tranche, 464 billion won for the 30 billion won 1.5-year tranche, and 233 billion won for the 20 billion won 2-year tranche. The company met its fundraising targets across all maturity segments with double-digit discounts (-36 bp, -70 bp, -61 bp) relative to the lower end of its target yield range.

Behind SK Eco Plant’s strong performance, the benefits of group-wide rebalancing played a positive role. As the incorporation of high-quality subsidiaries such as SENKO Co.,Ltd. becomes more concrete, the bond market is effectively reevaluating the company not as a construction firm but as an information technology (IT) components company.

This improvement in fundamentals is also evident in its actual financial metrics. SK Eco Plant’s consolidated revenue for the first quarter of this year reached 4.8997 trillion won, a 99.3% increase year-over-year, while operating profit surged 1,261.7% to 931.4 billion won. Its debt-to-equity ratio (29.1%) and debt-to-assets ratio (176.2%) also declined compared to the end of last year, comfortably meeting appropriate levels.

A corporate bond market official commented, “Considering factors such as the integration of SENKO Co.,Ltd., almost no investor views SK Eco Plant as a construction bond,” adding, “The company strongly emphasized to the market that many negative factors have been resolved as its performance has shifted toward that of an IT components company.”

The source continued, “However, since the group changes its business direction too frequently, governance issues are bound to arise,” noting, “This is a somewhat concerning factor from the perspective of bond investors.”

KCC Corporation also secured 1.385 trillion won in its bookbuilding on the 23rd, which had targeted a total of 200 billion won. Orders totaling 695 billion won poured in for the 80 billion won 2-year issue, and 700 billion won for the 120 billion won 3-year issue. The 2-year bonds were priced at -5 basis points and the 3-year bonds at -4 basis points relative to their respective market average yields.

In KCC Corporation’s case, concerns over declining profitability in its core business were offset by its substantial cash equivalents and the value of its stock holdings. KCC Corporation’s operating profit for the first quarter of this year was 88.1 billion won, a 14.8% decrease from the same period last year, indicating a slowdown in its operating performance. Due to mounting debt, total borrowings surged to 5.4374 trillion won, and the debt-to-equity ratio rose to 30.9%, exceeding the credit rating agencies’ threshold for close monitoring (30%).

Nevertheless, analysts note that its abundant cash and cash equivalents—totaling 1.4694 trillion won—and the value of its holdings in other companies served as a solid buffer, absorbing investor demand for its investment-grade rating (AA-). In effect, the company offset the deterioration in fundamentals caused by the slowdown in operating cash flow with its overwhelming asset base.

Another corporate bond market insider commented, “KCC Corporation seems to be overvalued from a fundamentals perspective due to its large holdings of stocks and cash equivalents,” adding, “However, given that the competitiveness of its core business is declining, the company is likely facing significant internal challenges.”