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Biz News Korea(Eng)
S. Korean bond market tepid due to possible U.S. interest rate hike
- Collected
- 2016.10.20
- Distributed
- 2016.10.24
- Source
- Go Direct
According to the financial investment industry on Tuesday, the new pipeline of 895 billion won ($797 million) during the first 14 days this month was under-booked by 74 billion won, or 8.27 percent worth. The under-subscription ratio for 1.77 trillion won offering in September hit 10.23 percent, compared with 2.28 percent in August, 3.57 percent in July, 1.47 percent in June and 2.1 percent in May.
The yield of the three-year government bonds, a benchmark for corporate debt, jumped from 1.276 percent on October 4 to 1.353 percent on Tuesday, adding more than 10 basis points from early this month.
Investors have turned negative on the prospects for the central bank opting for another rate cut to aid the drooping economy after the U.S. Federal Reserve indicated it would start raising interest rates.
Trade has been limited to investment-grade products, but new arrivals have become unwelcome.
Huvis Corp. and Pulmuone Co., with credit rating of A- were met with cool response.
The private placement for Huvis’s two-year debts was entirely shunned by local institutional investors while Pulmuone’s offering of 30 billion won worth of its three-year notes drew 25 billion won orders. On Monday, Korean Air Lines Co.’s one-year domestic offering of BBB+ flopped, failing to draw a single order due to investors’ jitters about exposure to its sister company Hanjin Shipping teetering on the brink of insolvency.
By Ko Min-suh
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]