The risk of debt distress hangs over the Korean stock market amid increasing new offerings

The debt distress that plagued South Korean stock exchanges in their record-breaking IPO year, surpassing $ 17 billion, is expected to last throughout the year and weigh on stock performance next year, as new bulk offers are scheduled for the end of the year.

Samsung Heavy Industries Co. is preparing a 1.28 trillion won ($ 1.1 billion) rights offer this week. The shipbuilding major will sell 200,005,000 new shares at 5,130 won each to its existing shareholders on Friday to raise 1.28 trillion won ($ 1.1 billion), of which the company will use 782.5 billion won. for operations and 500 billion won for debt repayment.

Ecopro Co., the largest shareholder in battery materials maker Ecopro BM Co., will raise 503.4 billion won by selling 5.27 million new shares at 95,441 won each on Friday. Ecopro completes the offer of rights for a share exchange with its subsidiary Ecopro HN Co.

Low-cost airline Jin Air Co. is also expected to issue 7.2 million shares at 17,200 won per share to raise 123.8 billion won.

Others waiting to add new shares are EdisonEV Co., Y-Optics Manufacture Co., Isupetasys CO. and ChunLab Inc.

A flood of additional new shares could still weigh on the already heavy market with IPOs and rights offerings throughout the year.

According to local rating agency Korea Investors Service, new stocks and hybrids offered by Korean companies have been valued at 1.5 trillion won so far this year. In Kosdaq alone, market capitalization increased by 11 trillion won on the back of new entrants.

The oversupply and the risk of oversupply could have a negative effect on the market in the new year, when demand could be contained by lower and higher interest rates in the United States.

By Kim Je-gwan and Lee Soo-min

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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