Non-prime bond investor sentiment for issuers rated A or below is deteriorating in the wake of JoongAng Group's liquidity crisis, raising concerns over refinancing by companies facing debt maturities this year. Led by Doosan (000150) and Hanjin (002320) group companies with upcoming corporate bond maturities, issuers with BBB-grade credit ratings are hesitant to issue. Investor sentiment toward A-grade companies has also noticeably slowed, and small and mid-sized brokerages that handle a large share of non-prime bond underwriting are expected to bear the brunt of the impact.
According to the Korea Securities Depository on Tuesday, publicly offered corporate bonds rated between BBB- and BBB+ that mature this year are estimated at approximately 663 billion won. As early as July, Doosan, Doosan Fuel Cell (336260), Hanjin, AJ Networks (095570), and HL D&I Halla must respond to public bond maturities, while E-Land World, Ecopro (086520), LS Networks (000680), SK Advanced, Yeochun NCC, and Pulmuone Foods also have funding needs for maturity repayments scheduled through year-end.
Refinancing is customary, but a different mood has been detected recently. Amid a sharp rise in market interest rates this year, public bond issuance has contracted in tandem since JR Global REIT and JoongAng Group affiliates filed for rehabilitation proceedings. Some analysts argued the impact on large corporate groups would be limited, but Doosan Group and Hanjin Group are currently not considering issuance. AJ Networks, a regular issuer, has also leaned toward watching the market, while LS Networks preemptively raised 20 billion won early in the private placement market.
The same holds for A-grade companies. SeAH Steel (A+), the first to conduct institutional demand forecasting after the JoongAng affiliates' rehabilitation filing, received orders of 240 billion won, three times its target of 80 billion won. Compared with the demand forecasts in 2024 and 2025, which also targeted 80 billion won and drew buy orders of 1.025 trillion won and 570 billion won respectively, investment demand has fallen noticeably. LS (A+) and LS Cable & System (A+), whose credit rating outlooks were recently upgraded to "positive," have also not established funding plans in light of interest rate levels. They appear hesitant to issue as the retail market mood has become difficult to gauge. An investment banking (IB) industry official said, "Since the JoongAng Group situation, there have been no cases of BBB-grade companies issuing, making it difficult to predict the impact on retail investor sentiment," adding, "There is also some observed tendency for companies to watch one another until the first mover emerges."
