[Edaily Marketin KIM YEON-SEO Reporter] Financial holding companies such as JB Financial Group Co., Ltd., iM Financial Group, and ShinhanFinancialGroup Co.,Ltd. are set to issue hybrid capital securities (perpetual bonds) in quick succession this coming September. This move is interpreted as an effort to address the increase in risk-weighted assets resulting from asset growth and to maintain stable capital adequacy.

According to the investment banking (IB) industry on the 26th, JB Financial Group Co., Ltd. (A+), iM Financial Group (AA-), and ShinhanFinancialGroup Co.,Ltd. (AA-) are planning to issue a total of 470 billion won in hybrid capital securities this September. Depending on the results of the bookbuilding process, the total issuance amount could increase to as much as 600 billion won.

Hybrid capital securities are bonds that have no maturity or typically have a long maturity of 30 years or more; if certain requirements are met, they are recognized as capital for accounting purposes. Since they pay interest like bonds while also serving to bolster capital, financial holding companies and insurance firms primarily issue them to manage their capital ratios.

JB Financial Group Co., Ltd. aims to issue 100 billion won worth of hybrid capital securities and will conduct a bookbuilding process for institutional investors on the 2nd of next month. The scheduled issuance date is the 10th of the same month. DB Securities and Shinhan Investment Securities are serving as lead underwriters.

iM Financial Group is also proceeding with the issuance of 100 billion won worth of hybrid capital securities. KB Securities is serving as the sole lead manager, and the issuance is scheduled for the 11th of next month following a bookbuilding process on the 3rd.

ShinhanFinancialGroup Co.,Ltd. is launching a bookbuilding process targeting 270 billion won. If there is sufficient demand from institutional investors, it plans to increase the issuance amount to a maximum of 400 billion won. NH INVESTMENT & SECURITIES is serving as the sole lead underwriter. The bookbuilding date is the 4th of next month, and the scheduled issuance date is the 14th.

Earlier this month, WooriFinancialGroup (AA-), KB Financial Group (AA-), and Kyobo Life Insurance (AA0) conducted book-building for the issuance of hybrid capital securities. WooriFinancialGroup received orders totaling 584 billion won for a target of 270 billion won, while KB Financial Group received 520 billion won in orders for a target of 270 billion won. Kyobo Life Insurance also secured 446 billion won in demand for a target of 300 billion won.

Market analysts suggest that financial holding companies are expanding their issuance of hybrid capital securities to address the increase in risk-weighted assets resulting from asset growth and to maintain stable capital ratios. Hybrid capital securities are recognized as supplementary capital for financial holding companies if certain requirements are met, thereby helping to boost capital ratios.

A bond market official stated, “It appears that financial holding companies are proactively bolstering their capital in anticipation of an expansion in risk-weighted assets due to factors such as increased loan portfolios,” adding, “Given that recent book-building rounds have seen orders exceeding the offering amount, investor demand remains relatively stable.”