Hanwha leads Q3 corporate bond issuance

Hanwha CI

Hanwha Group issued the most corporate bonds, both public and private, among domestic conglomerates in the third quarter of 2024.

Industry sources reported Thursday that Hanwha Group issued a total of 2.39 trillion won ($1.8 billion) in corporate bonds in the third quarter of the year, accounting for about 19 percent of the total bond issuance by conglomerates. This is a sharp increase from the 750 billion won issued in the same period in 2023, more than tripling in size.

The increase was largely due to Hanwha‘s insurance subsidiaries raising capital. Hanwha Life Insurance Co. issued 1.1 trillion won in hybrid bonds through two offerings while Hanwha General Insurance Co. issued 350 billion won in subordinated bonds.

Unlike standard corporate bonds, hybrid and subordinated bonds are classified as capital rather than debt, which increases insurers’ Korean Insurance Capital Standard (K-ICS) ratios, a key measure of financial soundness. Hanwha Life‘s K-ICS ratio stood at 162.8 percent in mid-2024, above the 150 percent level recommended by regulatory authorities. The capital raise is seen as a move to further strengthen the ratio in response to increasingly stringent financial regulations, with domestic insurers issuing more than 3 trillion won in hybrid bonds in 2024 to date.

Hanwha Solutions Corp. additionally issued 700 billion won in bonds to finance its defense industry expansion, while Hanwha Energy Corp. will hold its third public bond demand forecast of the year next week, with plans to issue up to 150 billion won. The group appears to be ramping up borrowing for share purchases and strategic investments.

SK Group, typically the top corporate bond issuer, issued over 2 trillion won in the second quarter of 2024 but saw a reduction in the third quarter, issuing 1.26 trillion won, or around 420 billion won less than the same period during the previous year.

In contrast, Samsung Group sharply increased its bond issuance. After issuing only 19 billion won in corporate bonds in the third quarter of 2023, the group issued 1.14 trillion won in 2024 to date, indicating a shift from its traditionally debt-free stance.

Samsung C&T Corp., which returned to the bond market after two and a half years, issued 500 billion won in public bonds in September 2024. Originally targeting 300 billion won, the company raised over seven times that in demand at 2.23 trillion won. Despite increasing its issuance to 500 billion won, strong demand allowed Samsung C&T to secure lower interest rates than market averages, and the company holds a top-tier AA+ (stable) credit rating that is backed by its diversified portfolio and business stability.

Samsung Biologics Co. also returned to the bond market after a three-year hiatus, securing more than seven times its target of 400 billion won in demand in September 2024. It raised 2.94 trillion won in total, surpassing SK hynix Inc.’s 2023 record of 2.59 trillion won in 2023.Samsung Biologics plans to double its bond issuance to 800 billion, backed by strong investor interest.