The company continues to issue bonds... In the first half of this year, 52 trillion yuan worth of maturing bombs are waiting to explode.

The company bond issuance market, which had been quiet for a period, has resumed activity at the beginning of the new year. As the largest maturity wave of corporate bonds in history approaches this year, major companies are acting quickly to refinance their funds.

According to the Korea Exchange, on January 5th, Hanwha Aerospace and POSCO Future Technology announced plans to issue corporate bonds worth 250 billion KRW each. Lotte Wellfood and Hanwha Investment & Securities also announced they will raise 200 billion KRW and 150 billion KRW respectively. Based on demand forecasts, these companies have reserved the flexibility to double their issuance scale if needed. Among them, Hanwha Aerospace has already initiated its first demand forecast for this year, and the remaining companies will follow with their own demand forecasts.

The process of companies issuing bonds to raise funds is closely related to market interest rates. Until the end of last year, rapidly rising interest rates caused financing pressures, leading to a continued atmosphere of delaying issuance. As the Bank of Korea maintained a freeze on the benchmark interest rate and the government expanded government bond issuance, bond yields broke through 3%, and corporate bond yields also rose accordingly. Using a three-year AA- rating as a benchmark, corporate bond yields approached 3.6% at the end of last year. Under this trend, the spread between government bonds and corporate bonds has also widened significantly.

Affected by this rate increase and the seasonal slowdown at year-end, the total issuance of corporate bonds in the fourth quarter last year was only 9.7 trillion KRW, a sharp decrease from 34.1 trillion KRW in the first quarter of last year. However, as 2026 approaches, the situation is changing. At the start of the new year, institutional investors have resumed fund operations, creating a certain level of demand for corporate bonds. This “year-start effect” is stimulating companies to restart issuance.

In particular, the scale of maturing corporate bonds this year reaches 78.4 trillion KRW, with about 52 trillion KRW concentrated in the first half of the year. Specifically, in January, February, and April, bonds worth an estimated 11-12 trillion KRW are expected to mature each month. From the companies’ perspective, issuing new bonds to repay maturing bonds is unavoidable. In fact, many of the companies planning to issue bonds this time are primarily using the proceeds for “debt repayment,” reflecting this trend.

However, for the corporate bond market to truly recover, interest rates need to remain stable. Recently, government bond yields have stabilized somewhat due to interventions in the foreign exchange market, which could positively influence investor sentiment. Additionally, foreign capital inflows resulting from inclusion in the global government bond index and the expansion of securities firms’ own fundraising scale are also seen as factors that could support demand for corporate bonds.

This situation is likely to lead to a concentration of corporate bond issuance in the first half of the year. Especially after January 8th, when demand forecasts for various companies officially commence, the results could make the market environment even more active. Experts predict that issuance volume this year may still be adjusted based on interest rates and demand conditions, but the first half is expected to remain active to meet the upcoming maturity bond issuance activities.