SK Hynix purchased approximately 20 trillion won in bonds this year, reshaping South Korea's bond issuance market through large-scale acquisitions across corporate bonds, bank bonds, securities bonds, and public bonds, according to bond market sources and securities industry data on July 8. The purchases stem from record semiconductor performance that rapidly increased corporate cash holdings, requiring short-term investment channels. SK Hynix recorded 52 trillion won in revenue and 37 trillion won in operating profit in Q1, marking the highest results in company history, with cash assets reaching 54.3 trillion won — up 19.4 trillion won from the previous quarter.
SK Hynix Purchases 20 Trillion Won Across All Credit Sectors
SK Hynix purchased an estimated 20 trillion won in securities bonds and corporate bonds this year, spanning all premium credit sectors including public bonds such as Korea Electric Power Corporation bonds, bank bonds, financial bonds, securities bonds, and credit specialized financial company bonds, according to bond market and securities industry sources on July 8. The company's stock price rose over 1,300% from the low point in April last year, and on June 22, SK Hynix surpassed Samsung Electronics in market capitalization for the first time in 25 years. The two companies currently compete for the top market capitalization position.
Record Q1 Results Generate 54.3 Trillion Won Cash Position
SK Hynix's emergence as a major bond market player reflects the need to deploy surplus cash generated by unprecedented semiconductor performance on a short-term basis, according to market analysis. The company recorded 52 trillion won in revenue and 37 trillion won in operating profit in Q1, setting all-time record results. Cash assets reached 54.3 trillion won during the same period, up 19.4 trillion won from the previous quarter end. SK Hynix is scheduled to begin American Depositary Receipt (ADR) listing and trading on July 10 (US time July 9). If dollars raised through ADR issuance are converted to won and brought into Korea, additional cash management demand may arise.
Direct Issuer Inquiries Drive Full-Lot Acquisitions
Bond purchases are primarily conducted through trust accounts at five major securities firms that received asset management mandates from SK Hynix, according to securities industry sources. "Deals are often created when SK Hynix inquires with issuers about available securities to purchase," a short-term money market official stated. "Because these are inquiry-driven issuances, SK Hynix frequently takes the entire volume whether public bonds or credit specialized financial company bonds, and the market estimates purchase scale through these transactions." SK Hynix participated in the Samsung Securities corporate bond demand forecast on July 2, and reportedly agreed to fully underwrite 1.26 trillion won in commercial paper issued by Mirae Asset Securities this month. The 1.595 trillion won in orders concentrated in the Shinhan Investment & Securities corporate bond demand forecast the previous day also reflected SK Hynix demand, according to market analysis. "As SK Hynix became a major bond market player, issuers such as securities firms and card companies check Hynix's intentions first," an asset management company official stated. "Because there's no need to find demand in the market, bond supply effectively decreases, which somewhat improved the atmosphere in the short-term money market and corporate bond market."
Investment Scope Expands to 2-Year Maturities from June
Investment targets and maturities expanded compared to early this year. While the company invested in maturities under one year early this year, from June it reportedly purchased credit specialized financial company bonds, public bonds, bank bonds, and corporate bonds with maturities around two years. "Positive aspects are confirmed on the demand side, such as credit investment by semiconductor companies," Choi Sung-jong, NH Investment & Securities credit researcher, stated. "Whether to invest in volumes over 3 years will depend on the semiconductor cycle, and we expect purchases to continue at maturity levels around 2 years going forward."
Bond Market Relief Remains Confined to Issuance Activity
SK Hynix's large-scale purchases proved insufficient to spread warmth across the broader bond market, according to some market observers. "Rather than injecting warmth into the bond market, it offset the degree of demand contraction," Choi stated. "In a situation where corporate bond and public bond supply increased in June, it reduced demand burden." One bond broker stated, "Because volume is only received in the issuance market, issuance goes well but trading in the secondary market remains sluggish." Another short-term money market official stated, "Overall, bond purchasing capacity is decreasing and funds are flowing to the stock market. It's difficult for the market to improve dramatically just because Hynix enters, and real demand will flow in when rates that rose indefinitely settle down after confidence forms about the Bank of Korea's final rate hike magnitude." The 3-year Korean treasury bond yield, sensitive to monetary policy, rose to 3.94% last month, recording the highest level since November 2023, and is currently fluctuating around 3.8%. It was affected by the retreat of expectations for Bank of Korea base rate cuts in the second half of last year, followed by strengthened rate hike forecasts this year amid inflation concerns following the US-Iran war. Fund movement from bonds to stocks due to the KOSPI index rally also negatively impacted bond investment sentiment. The Bank of Korea is scheduled to hold a Monetary Policy Board meeting on July 16 to decide the base rate, with the possibility raised of raising the base rate for the first time since January 2023.
FAQ
How much did SK Hynix purchase in bonds this year?
SK Hynix purchased an estimated 20 trillion won in bonds this year, spanning corporate bonds, bank bonds, securities bonds, and public bonds, according to bond market and securities industry sources on July 8.
What drove SK Hynix's large-scale bond purchases?
The purchases stem from record semiconductor performance that rapidly increased corporate cash holdings, requiring short-term investment channels. SK Hynix recorded 52 trillion won in revenue and 37 trillion won in operating profit in Q1, with cash assets reaching 54.3 trillion won — up 19.4 trillion won from the previous quarter.
How does SK Hynix conduct bond purchases?
Bond purchases are primarily conducted through trust accounts at five major securities firms that received asset management mandates from SK Hynix. Deals are often created when SK Hynix inquires directly with issuers about available securities to purchase, frequently taking entire issuance volumes.
