Korean firms' direct financing gains 44.7 pct in Dec.

SEOUL, Jan. 29 (Yonhap) -- South Korean companies' direct financing rose 44.7
percent in December from a month earlier mainly because local financial services
firms sold more debt in a bid to increase capital, the financial watchdog said
Thursday.
Local companies raised 12.4 trillion won (US$9 billion) by floating stocks and
bonds in December, compared to 8.59 trillion won the previous month, according to
the Financial Supervisory Service.
But for all of 2008, local firms' direct financing declined 9.9 percent on-year
to 113.8 trillion won, it added.
The issuance of shares jumped 147.1 percent to 600.5 billion won last month.
Meanwhile, companies raised 7.97 trillion won by selling debt in December, up
126.8 percent from the previous month.
"A jump in debt sales came as local financial services companies issued about 3.2
trillion won in bonds to jack up capital bases of their banking unit," an
official at the regulator said. "Given this one-off factor, a rise in direct
financing does not mean that fundraising conditions improved."
Local banks have been making efforts to beef up their falling capital adequacy
ratios, a key barometer of financial soundness, as the economic slump and credit
squeeze are increasing the number of bad loans.
Smaller firms responded to the pinch in raising funds by selling corporate bonds
in December. Their debt offerings tumbled 50.9 percent on-month to 8.3 billion
won amid the slowing economy.
The issuance of asset-backed securities inched up 5 percent to 1.64 trillion won,
the watchdog said. Asset-backed securities are bonds or notes backed by assets
consisting of debt obligations such as car loans, home equity loans, credit card
receivables and student loans.
sooyeon@yna.co.kr
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