[Edaily Marketin Reporter KIM YEON-SEO ] Corporate bonds totaling over 7 trillion won will mature all at once this coming September. This is the largest monthly maturity amount in the second half of the year. Companies that took a breather during the summer off-season are resuming bond issuances, primarily to meet refinancing needs for existing corporate bonds. However, analysts note that it is difficult to conclude that overall market sentiment has fully recovered, as most of the companies planning to issue bonds are rated A or higher, and the yield spread between corporate bonds and government bonds is widening.

According to BondWeb on the 14th, corporate bonds maturing in the second half of this year total 27.0359 trillion won. Of this amount, 7.5562 trillion won—accounting for 28%—is concentrated in September. The monthly maturity amounts are as follows: △July: 5.4116 trillion won △August: 2.8306 trillion won △September: 7.5562 trillion won △October: 6.1133 trillion won △November: 3.4695 trillion won △December: 1.6547 trillion won. The amount maturing in September is approximately 2.7 times that of August, making it the highest in the second half of the year.

This concentration of maturities in September is related to seasonal patterns in the corporate bond market. Typically, issuance declines in July and August as summer vacations overlap with the schedule for submitting semi-annual reports. In December as well, new investments by institutional investors decrease as they begin their year-end financial settlements. Consequently, companies increase issuance in September, when raising funds is relatively easier, and the maturities of the bonds issued at that time also fall in September.

According to the investment banking (IB) industry, companies currently preparing for corporate bond issuances in September include Lotte Holdings (A+), Hanwha REITs (A+), Samyang Packaging (A-), Woori Financial F&I (A0), Daishin Securities (AA-), Hana Securities (AA0), Coway (AA-), DB Securities (A+), and Korean Air (A0). Financial holding companies such as JB Financial Group (A+) and iM Financial Group (AA-) are also preparing to issue hybrid capital securities next month. This is the backdrop against which public corporate bond issuance—which had slowed in July and August—is expected to pick up again in September.

However, the credit ratings of most companies planning to issue bonds are A-grade or higher. So far, no BBB-rated companies are among those preparing for September issuances. Analysts suggest that, amid increased interest rate volatility, institutional investors are favoring bonds with relatively higher credit ratings, causing non-investment-grade companies to hesitate in issuing public bonds.

Credit spreads, which reflect investor sentiment toward corporate bonds, are also widening. Today, the yield spread between 3-year government bonds and 3-year AA-rated corporate bonds stood at 70.3 basis points (1 bp = 0.01 percentage point), widening by 2.8 basis points from 67.5 basis points on July 1, the start of the second half of the year. Compared to 52.4 basis points at the start of the year, the spread has widened by 17.9 basis points.

Credit spreads are a key indicator of investor sentiment in the corporate bond market. A widening spread indicates that investors are demanding higher yields on corporate bonds, suggesting that corporate financing conditions are deteriorating and investor sentiment is weakening. Conversely, a narrowing spread is interpreted as a sign that investment demand for corporate bonds is recovering.

Market analysts note that even if corporate bond issuance in September increases compared to August, it is difficult to conclude that the credit market has entered a full-fledged recovery phase. This is largely because the rise in issuance is driven more by refinancing needs from companies facing large-scale maturities than by an expansion of issuance resulting from improved investor sentiment.

In particular, some analysts suggest that a recovery in the corporate bond market will be difficult, as companies are diversifying their funding sources—such as bank loans, commercial paper (CP), and mezzanine financing—due to the burden of high interest rates.

An official in the financial investment industry stated, “With corporate bond yields rising significantly recently, companies are comparing various funding options and selecting the most favorable ones,” adding, “Unless short-term interest rates stabilize clearly, it will be difficult for investor sentiment in the corporate bond market to recover in earnest by year-end, with the exception of some carry trade demand.”