This article appeared in Signal, the capital markets compass, on May 12, 2026 at 13:53.
LG Electronics (066570.KS) is returning to the domestic corporate bond market for the first time in three years. While the company had focused on repaying maturing debt with cash this year, it is now targeting up to 500 billion won in fresh funding. The group judges that issuance conditions may become more favorable heading into the second half, though persistently high market rates remain a burden.
According to investment banking (IB) industry sources on Tuesday, LG Electronics plans to conduct institutional bookbuilding on the 19th of this month to issue 250 billion won in public corporate bonds. The maturity structure is divided into 2-, 5-, and 10-year tranches, with the issuance size leaving room for expansion up to 500 billion won depending on bookbuilding results. With 150 billion won in corporate bonds maturing in September, the company is seen entering the market to secure funds for bank loan repayments and materials procurement.
The rate environment appears to lie behind LG Electronics' shift toward external funding, after repaying 320 billion won in public bonds through the first half using bank loans and cash on hand. Analysts say the company naturally pushed back its funding timeline as the corporate bond market weakened from the start of the year and market rates jumped due to the Middle East war. According to the Korea Financial Investment Association, yields on three-year unsecured corporate bonds (AA-) have risen more than 75 basis points (1bp=0.01 percentage point) from the start of the year, setting a new high since December 2023.
At the LG Group level, the judgment was that issuance conditions could become more favorable heading into the second half, sources said. "LG Group was one of the conglomerates that had deep concerns about early-year issuance even when market rates surged last year," an IB industry source said. "Since several securities firms also judged that the issuance environment would be more favorable after the first half, LG Group likely leaned toward observing first-half conditions."
In fact, LG Hellovision, one of the group's key affiliates, showed a similar issuance pattern to LG Electronics. While LG Hellovision had issued public bonds every first quarter, this year it issued commercial paper (CP) for the first time since its founding to repay bonds maturing in January. Having to address corporate bond maturities in both January and May this year, LG Hellovision watched the market through the first quarter before issuing 170 billion won in corporate bonds through institutional bookbuilding in late April.
However, with market rates remaining at burdensome levels, opinions are divided on whether LG Group's bet will pay off. According to a report released by Hana Securities Research Center on the 6th, the spread between five-year Treasury bonds and AA0-rated corporate bonds of the same maturity widened by about 2.6 basis points from the previous month. LG Hellovision also had to offer rates 2 basis points and 1 basis point higher than the market average on its 2- and 3-year tranches, respectively, in institutional bookbuilding conducted on April 23 this year.
