Seoul, (IANS) South Korean companies’ direct financing through issuing stocks and bonds dropped 22.2 percent last month as demand for funds weakened broadly amid the protracted European fiscal crisis and the global economic slowdown, data by a financial watchdog showed Tuesday.
Corporate financing through public offers such as equity issuance and bond sales reached 9.26 trillion won ($8.29 billion) in August, down 22.2 percent from a month earlier, according to the Financial Supervisory Service (FSS).
The August decline came as overall corporate demand for funds weakened this year due to the prolonged crisis in Europe and slowing economic recovery across the globe. For the first eight months of this year, the direct corporate financing amounted to 87.29 trillion won, down 5.7 percent from the same period last year, reported Xinhua.
Equity financing, including initial public offering (IPO) and rights offering, came in at 118.7 billion won in August, down 44.8 percent from the previous month. There was no IPO made last month, but rights offering grew 13.3 percent.
Debt financing, or bonds issued by industrial companies and financial firms, stood at 9.15 trillion won in August, down 21.8 percent from a month before, according to the FSS.
Corporate bond issuance increased in July when borrowing costs reduced after Bank of Korea (BOK) cut its policy rate by 25 basis points (bps) to 3 percent, but the bond sale retreated last month as the central bank froze the rate in August.