[Edaily Marketin KIM YEON-SEO Reporter] As the year-end book-closing season begins, the number of companies conducting book-building for corporate bond issuances has plummeted. Since Korea Investment & Securities and POSCO Future M conducted book-building for corporate bonds earlier this month, issuance schedules have effectively come to a halt; currently, Woori Investment & Securities is the only company scheduled to conduct additional book-building this month. Woori Investment & Securities is set to raise funds through its first public corporate bond offering since becoming a full-service securities firm.

According to the investment banking (IB) industry on the 6th, Woori Investment & Securities plans to conduct a bookbuilding process on the 18th for the issuance of corporate bonds totaling 100 billion won. By tranche (maturity), the issuance consists of 40 billion won in 2-year bonds and 60 billion won in 3-year bonds. The company has left open the possibility of increasing the issuance amount to a maximum of 200 billion won, depending on the results of the bookbuilding. NH Investment & Securities and Korea Investment & Securities are serving as the lead underwriters. The target yield band was set relatively wide, ranging from –40 basis points (1 bp = 0.01 percentage point) to +40 basis points relative to the average yield for ‘A+’ rated bonds (as determined by private credit rating agencies). Following the bookbuilding process, the corporate bonds are scheduled to be issued on the 26th.

Effect of

a 1 Trillion Won Capital Increase… Credit Rating Outlook ‘Positive’

The market expects Woori Investment & Securities to secure sufficient investor demand without difficulty, given that it has set a relatively wide target yield range and has a ‘positive’ credit rating outlook. Currently, Woori Investment & Securities’ corporate credit rating (ICR) is ‘A+ (Positive).’

The “positive” credit rating outlook for Woori Investment & Securities was largely driven by the 1 trillion won rights offering carried out last May. Following the rights offering, the company’s equity capital expanded to approximately 2.2 trillion won. This places it at the top tier among general securities firms, excluding comprehensive financial investment firms.

The company is also expanding its business foundation based on this increased capital. Woori Investment & Securities is pursuing business expansion centered on its investment banking (IB) division, which can leverage synergies among Woori Financial Group affiliates. In particular, the company plans to strengthen its operational foundation in the IB sector—including corporate lending and acquisition financing—through collaboration with the Group’s banks. While enhancing competitiveness in the asset management division by expanding its operational staff and increasing investment limits, the company is also expected to strengthen its business capabilities in the retail sector—such as brokerage and wealth management—by leveraging the Group’s brand recognition.

The possibility of an additional capital increase remains open. As the company aims to secure designation as a securities investment trust in the near term, its business expansion is expected to continue until its market position and business foundation reach the level required for such designation.

Prospects for

Improved Financial Soundness…Increased Risk Investments Pose a Burden

Thanks to the large-scale capital injection, financial soundness indicators are also expected to improve significantly. According to Korea Ratings, if the effects of the capital increase in May are reflected in the financial indicators as of the end of March this year, the adjusted Net Capital Ratio (NCR) is estimated to rise from 490% to 953%, and the Net Capital Ratio from 754% to 2,938%. Analysts also predict that the burden of maintaining financial soundness will ease, as the ratio of net non-performing loans to equity is projected to decrease from 10.5% to 5.9%.

However, the rapid increase in risky investments during the business expansion process remains a concern. In addition to the growth in stock and bond holdings resulting from expanded investments in the asset management division since last year, the quantitative and qualitative risks associated with contingent liabilities are also increasing. The volume of contingent liabilities, which stood at 646 billion won at the end of 2024, grew rapidly—driven primarily by corporate loan commitments—reaching 1.1345 trillion won by the end of March this year. At that time, the ratio of contingent liabilities to equity capital reached 92.6%. As the bank’s investment capacity has expanded through a rights offering, there is a possibility that risk exposure will increase further in the future, particularly in corporate lending.

Lee Hyuk-jin, a senior researcher at Korea Ratings’ Financial Division 2, stated, “While the trend of expanding risky investments may continue and cause financial soundness indicators to deteriorate somewhat, they are expected to remain at an overall excellent level.” He added, “As risky investments increase, profit-generating capacity is expected to improve, enabling capital expansion through retained earnings; moreover, there is the potential for additional financial support from the parent company if necessary.”