Hana F&I and Meritz Financial Group are conducting bond demand forecasting this week, targeting 1500억원 each on July 27 and July 29 respectively. The move comes as the Korean corporate bond market experiences reduced summer issuance activity, yet recent successful demand forecasting by SK Ecoplant (9870억원 orders on July 22) and KCC (1조3850억원 orders on July 23) signals recovering institutional investor appetite. According to financial industry sources on July 26, the combination of supply reduction and elevated absolute interest rates is attracting institutional buyers back to credit markets despite ongoing rate volatility.
Hana F&I Structures 1500억원 Bond Issuance Across Three Tranches
Hana F&I will conduct demand forecasting on July 27 for a total 1500억원 public bond issuance. The company structured the offering into three tranches: 300억원 in 1.5-year bonds, 700억원 in 2-year bonds, and 500억원 in 3-year bonds. The interest rate band for all three tranches is set at -30~+30bp relative to individual private bond evaluation company rates. Based on demand forecasting results, the company plans to increase issuance up to 3000억원. NH Investment & Securities, KB Securities, Korea Investment & Securities, and Shinhan Investment Securities serve as lead managers. The scheduled issuance date is August 4.
Korea Ratings, Korea Investors Service, and NICE Credit Rating assigned Hana F&I a credit rating of A+ with a stable outlook. Kim Kyung-geun, chief analyst at Korea Investors Service, stated: "The company is restructuring its funding composition by reducing commercial paper weight and expanding corporate bond weight, which is positive for financial stability. Considering the holding company's management level and the company's plan to adjust purchase scale based on recovery amounts, the current level of financial stability is expected to be maintained."
Meritz Financial Group Targets 1500억원 in Two-Year and Three-Year Bonds
Meritz Financial Group will conduct demand forecasting on July 29 for a total 1500억원 bond issuance. The offering consists of 800억원 in 2-year bonds and 700억원 in 3-year bonds. Based on demand forecasting results, the company plans to increase issuance up to 2800억원. The interest rate band for both tranches is set at -30~+30bp relative to individual private bond evaluation company rates. NH Investment & Securities, KB Securities, Korea Investment & Securities, and Shinhan Investment Securities serve as lead managers. The scheduled issuance date is August 6.
Meritz Financial Group maintains strong business competitiveness and profitability centered on insurance and securities, though recent deterioration in asset quality indicators poses burden factors. Lee Jae-woo, chief analyst at Korea Investors Service, stated: "Meritz Financial Group is expected to maintain excellent business competitiveness and profitability centered on insurance and securities. However, with the non-performing loan ratio rising and some large transactions jointly invested by affiliates classified as substandard or below, there is a possibility of expanded asset quality management burden in the short to medium term."
Recent Bond Demand Forecasting Shows Strong Institutional Appetite
The corporate bond market recently experienced significantly reduced issuance due to summer off-season and expanded interest rate volatility. However, companies conducting demand forecasting secured orders far exceeding募集 amounts, indicating institutional investors' credit demand remains solid. On July 22, SK Ecoplant (A-) secured 9870억원 in orders, approximately 10 times the 1000억원 募集 amount. On July 23, KCC (AA-) received 1조3850억원 in orders for a 2000억원 募集, achieving successful demand forecasting.
Analysts attribute investment appeal to elevated absolute interest rates amid reduced supply pressure from issuance gaps. Some forecasts suggest credit market investor sentiment will further improve in the second half as fund flows that moved from bond products to other assets stabilize. However, advisors recommend gradually expanding investment scope centered on ultra-prime and upper-grade bonds, as interest rate and credit risks are not fully resolved.
Kim Sang-in, researcher at Shinhan Investment Securities, stated: "In the second half, reduced supply burden and stabilization of money moves that suppressed credit demand are expected. Based on elevated credit carry and spread attractiveness, preemptive positioning demand is expected to flow in." He added: "Since interest rate and credit risks remain, a split purchase approach is necessary. Starting with ultra-prime and upper-grade bonds with spread reduction potential, it is necessary to gradually expand lower-grade investment."
FAQ
What bond issuances are Hana F&I and Meritz Financial Group conducting this week?
Hana F&I is conducting demand forecasting on July 27 for 1500억원 across three tranches (1.5-year, 2-year, and 3-year bonds), with potential increase up to 3000억원. Meritz Financial Group is conducting demand forecasting on July 29 for 1500억원 in 2-year and 3-year bonds, with potential increase up to 2800억원. Both companies set interest rate bands at -30~+30bp relative to private bond evaluation rates.
Why is institutional demand for Korean corporate bonds recovering despite summer issuance decline?
According to financial industry sources on July 26, reduced supply pressure from issuance gaps combined with elevated absolute interest rates is attracting institutional buyers. Recent successful demand forecasting by SK Ecoplant (9870억원 orders on July 22) and KCC (1조3850억원 orders on July 23) demonstrates strong institutional appetite. Analyst Kim Sang-in at Shinhan Investment Securities noted that elevated credit carry and spread attractiveness are driving preemptive positioning demand.
