CJ Group affiliates have been tapping the commercial paper (CP) market repeatedly this month as the year-end corporate bond market faces a deep freeze, with companies raising funds according to their individual financing plans.
According to the Korea Securities Depository on Saturday, CJ ENM (035760.KS), CJ CheilJedang, and CJ CGV (079160.KS) have all raised funds through CP issuance. CJ ENM secured 200 billion won ($145 million), CJ CheilJedang raised 215 billion won, and CJ CGV obtained 75 billion won.
CP is a short-term note with maturities of one year or less, issued to secure working capital. Companies that find it difficult to access the corporate bond market have no choice but to turn to the short-term funding market.
"These companies frequently use CP for their funding operations," an investment banking industry source said. "The slowdown in business conditions is also likely a reason for their short-term financing."
The sharp rise in interest rates in the second half of this year, which has reduced corporate bond issuance, is also seen as a contributing factor.
Some observers suggest the companies are proactively securing funds ahead of large corporate bond maturities in the first half of next year. CJ ENM faces 285 billion won in maturities in January, while CJ CheilJedang has 420 billion won coming due in February. CJ CGV also has a put option deadline in June for a 300 billion won convertible bond issued in 2021.
"We proactively raised cash in line with our funding situation," a company official said.
Meanwhile, CJ ENM is reportedly preparing a public corporate bond issuance. While the specific size and timing have not been determined, the consensus is that it will likely be a refinancing issuance.
"With bond maturities approaching, they are preparing an issuance," an industry source said. "They will proceed according to interest rate conditions and their funding plans."
