Shinhan Investment & Securities and Kiwoom Securities are conducting corporate bond demand forecasting this month while under Financial Supervisory Service on-site inspections related to JTBC bond misselling allegations. Shinhan is conducting demand forecasting on the 7th for 250 billion won in bonds with 2-year and 3-year maturities, with planned issuance on the 15th, while Kiwoom is conducting demand forecasting on the 13th for 200 billion won in bonds with the same maturity structure, with planned issuance on the 21st. Industry observers attribute the bond issuances to scheduled bond maturities this year — Shinhan faces 210 billion won in maturities (110 billion won on the 24th and 100 billion won in November), while Kiwoom faces 300 billion won in maturities (210 billion won in September and 90 billion won in October) — rather than regulatory response. The FSS launched on-site inspections after retail investors alleged the two securities firms inadequately disclosed investment risks when selling JTBC bonds and related asset-backed securities, with JTBC holding a BBB long-term credit rating at the time.
Shinhan and Kiwoom Announce Bond Issuance Schedules
Shinhan Investment & Securities is conducting demand forecasting on the 7th for 250 billion won in corporate bonds with 2-year and 3-year maturities. The firm plans to issue the bonds on the 15th and may increase the issuance to up to 500 billion won if demand is strong.
Kiwoom Securities is conducting demand forecasting on the 13th for 200 billion won in corporate bonds, also structured with 2-year and 3-year maturities. The planned issuance date is the 21st, with potential to increase the offering to up to 400 billion won depending on investor demand.
Securities Firms Face Scheduled Bond Maturities This Year
Shinhan Investment & Securities has 210 billion won in corporate bond maturities scheduled this year. The firm faces 110 billion won in maturities on the 24th and an additional 100 billion won in November.
Kiwoom Securities has 300 billion won in bond maturities scheduled this year. The firm's maturities include 210 billion won in September and 90 billion won in October.
Investment banking industry sources view the bond issuances as preemptive funding measures to address these scheduled maturities and potential interest rate volatility in the second half of the year, rather than responses to regulatory issues.
Industry Views Demand Forecasting as Market Confidence Test
Market attention is focused on the demand forecasting results themselves rather than the fundraising amounts, according to investment banking industry observers. While regulatory inspections or sanctions can affect investor sentiment, strong demand forecasting performance would signal that market confidence in the two securities firms' creditworthiness and funding capabilities remains intact despite regulatory risks, industry sources stated.
Conversely, if orders fall short of expectations or unsold portions remain, this would confirm investor caution toward the firms, according to market observers. Industry sources view the demand forecasting as a process for investors to assess how they evaluate the two securities firms' creditworthiness and reputational risks, serving as a barometer for whether market confidence persists after the regulatory issues.
FSS Inspection Stemmed from JTBC Bond Misselling Allegations
The on-site inspection originated from allegations of improper sales practices related to corporate bonds issued by JTBC, a subsidiary of Joongang Group. Shinhan Investment & Securities served as the lead underwriter for the JTBC bond issuance, while Kiwoom Securities sold JTBC-related asset-backed short-term bonds (ABSTB) to retail investors.
The Financial Supervisory Service is examining whether the two securities firms adequately recognized JTBC's financial deterioration risks before issuing the bonds and whether they properly explained investment risks to investors. Retail investors have alleged improper sales practices, claiming they did not receive sufficient explanation of investment risks. JTBC held a BBB long-term credit rating at the time, the lowest level within investment-grade classifications.
FAQ
What bond issuances are Shinhan and Kiwoom conducting this month?
Shinhan Investment & Securities is conducting demand forecasting on the 7th for 250 billion won in bonds with 2-year and 3-year maturities, with planned issuance on the 15th and potential to increase to 500 billion won. Kiwoom Securities is conducting demand forecasting on the 13th for 200 billion won in bonds with the same maturity structure, with planned issuance on the 21st and potential to increase to 400 billion won.
Why are the two securities firms issuing bonds now?
Investment banking industry sources attribute the bond issuances to scheduled bond maturities this year and preemptive funding measures for potential interest rate volatility in the second half. Shinhan faces 210 billion won in maturities (110 billion won on the 24th and 100 billion won in November), while Kiwoom faces 300 billion won in maturities (210 billion won in September and 90 billion won in October).
