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| An official from Hana Bank checks bundles of cash at its office in Seoul, Oct. 24. Yonhap |
By Lee Min-hyung
Institutional investors engaged in a buying spree of corporate bonds here last week when the government released a set of measures to alleviate a market crunch, data showed Tuesday.
According to data compiled by Yonhap Infomax, institutional investors purchased corporate bonds worth 1.11 trillion won ($782.8 million) on the curb between Oct. 24 and 28, a more than sevenfold increase from a week earlier. They include banks, asset management firms and a group of other financial firms including state-run companies.
This came in reaction to the government's bid to launch a liquidity supply program worth 50 trillion won. The measure was introduced to ease escalating market woes concerning a Legoland developer's default on debt payments in Gangwon Province.
Soon after the scandal made headlines early last month, institutional investors' net buying of corporate bonds plunged. They net-sold them, worth 125 billion won between Oct. 11 and 14, when fears over a Legoland-sparked market crunch peaked.
Nonetheless, market experts remained cautious, saying that the latest financial unrest would continue for the time being despite the government's market stabilization measures.
"The recent expansion of credit spread stemmed from a lack of market liquidity ― caused by monetary tightening ― rather than the escalating credit risk factors," Samsung Securities analyst Kim Eun-ki said.
With the U.S. Fed and the Bank of Korea forecast to engage in a series of additional rate hikes by the end of this year, concerns over the financial unrest will remain in place here, according to the analyst.
He said the watchdog's intervention would not play a significant role from a long-term viewpoint.
"The stabilization of the monetary uncertainty is much more fundamental (to ease the ongoing financial unrest here)."
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