[Edaily Marketin KIM YEON-SEO Reporter] The corporate bond issuance market, which had effectively ground to a halt due to the overlap between the summer vacation season and the half-yearly report filing period, is beginning to pick up again. This week, Lotte Construction and E-Land World are conducting bookbuilding for their general corporate bonds, while KB Financial Group is moving forward with the issuance of hybrid capital securities.

According to investment banking (IB) industry sources on the 17th, Lotte Construction and E-Land World will conduct bookbuilding for institutional investors in the corporate bond market this week (August 18–21).

Lotte Construction (A0) will conduct a bookbuilding for corporate bonds totaling 50 billion won on the 19th, consisting of 30 billion won in 1-year bonds and 20 billion won in 1.5-year bonds. Depending on the results of the bookbuilding, the company has left open the option to increase the issuance limit to a maximum of 100 billion won.

NH Investment & Securities, KB Securities, Mirae Asset Securities, Korea Investment & Securities, Samsung Securities, Kiwoom Securities, and Hana Securities are serving as lead underwriters. The target yield band has been set at –30 basis points (bps; 1 bp = 0.01 percentage point) to +30 bps relative to the individual market average yield for each maturity. The scheduled issuance date is the 26th.

E-Land World, which holds a ‘BBB0’ credit rating, will also conduct a book-building process on the same day for 20 billion won worth of one-year corporate bonds. Depending on the results of the book-building, the issuance amount may be increased to a maximum of 40 billion won. Attention is focused on whether the company will be able to fully subscribe the offering amount amid recent weak investor sentiment surrounding BBB-rated corporate bonds. Kyobo Securities is serving as the sole lead underwriter. The target yield band is -30 to +30 basis points relative to the individual market average yield, and the scheduled issuance date is the 27th.

KB Financial Group (AA-) will conduct a bookbuilding process for 270 billion won in hybrid capital securities on the 21st. The securities have a maturity of 99 years and include a call option that can be exercised five years after issuance. If demand is sufficient, the company plans to increase the offering size to a maximum of 400 billion won. Kiwoom Securities and Hanyang Securities are serving as lead underwriters, and the issuance is scheduled for the 31st.

Despite signs of a resumption in issuance, forecasts suggest that the corporate bond market will continue to see a process of separating the wheat from the chaff on a company-by-company basis. This is because the trend of net redemptions persists, as companies—faced with the burden of higher interest rates—are repaying maturing bonds with cash or seeking other funding sources rather than issuing new bonds.

According to BondWeb, corporate bond redemptions this month (as of August 1–14) totaled 2.8306 trillion won, exceeding the 1.4773 trillion won in new issuances. Consequently, net redemptions amounted to 1.3533 trillion won. In particular, companies with weak fundamentals or low credit ratings are diversifying their funding sources—such as short-term financing and the liquidation of held assets—instead of issuing corporate bonds.

Lee Se-hyun, an analyst at NH Investment & Securities, stated, “Due to higher market interest rates, the trend of net redemptions in the corporate bond market has continued since the start of this year.” He added, “With yields on AA-rated corporate bonds—which were in the 3% range last year—rising to around 4.5%, and monetary policy shifting toward a tightening stance, the issuance market is currently undergoing a process of separating the wheat from the chaff.”

He continued, “Companies facing an unfavorable business environment or with lower credit ratings are actively seeking alternative funding methods, such as cash repayments, short-term financing, and the securitization of held assets.”