The credit spread, which refers to the difference in interest rates between corporate bonds and treasury bonds, widened to the highest level in two years and four months. This means that when companies raise funds by issuing corporate bonds, the amount of money over the credit rate, which has to be borne more than treasury bonds, has grown that much. The conditions for issuing corporate bonds have deteriorated.
According to the Korea Financial Investment Association on the 12th, the credit spread, which subtracted the interest rate on 3-year treasury bonds from the interest rate on 3-year AA corporate bonds, expanded to 0.7 percentage points on the 9th, the highest since February 20, 2024. The credit spread also recorded 0.698 percentage points on the 10th.
Considering that the spread was 0.495 percentage points at the same time last year, it has widened by more than 0.2 percentage points in a year. For example, if a company issues 100 billion won worth of one-year corporate bonds, the annual interest burden has increased by 200 million won due to the expansion of the spread. Analysts say that the expansion of the credit spread is the result of a variety of factors, including a sudden change in the outlook for the benchmark interest rate and a lack of supply and demand in the corporate bond market. Some observers say that institutional investors’ investor sentiment in corporate bonds has shrunk in the aftermath of a series of recent applications for rehabilitation procedures. The market predicts that this trend will continue for the time being.
[Reporter Oh Goes Back]
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