Hanjin Finalizes 40 Billion Won Bond Issuance with Interest Rates at 4.694% and 4.661% for Debt Repayment
Hanjin finalized the issuance conditions for its 127-1 and 127-2 unsecured bonds totaling 40 billion won on July 22, 2026. The interest rate for the 127-1 issue of 20 billion won was set at 4.694% and for the 127-2 issue also 20 billion won at 4.661%, based on the demand forecast results and final benchmark rates.
All proceeds from this issuance will be used to repay the 117-2 public bond of 70 billion won maturing on July 22, 2026, with the remaining 30 billion won to be covered by available cash. This is seen as an inevitable step to refinance maturing debt given the company's high debt dependency of 49.6% and debt-to-equity ratio of 183.6%.
Hanjin's interest coverage ratio for the first quarter of 2026 stood at 0.64x, meaning operating profit cannot cover interest expenses, and it recorded a net loss of 2.3 billion won. Its credit rating is BBB+ with a positive outlook, but a downgrade is possible if financial metrics deteriorate further.
The company has maintained dividends for 28 consecutive years at 600 won per share, but dividend cuts are possible if financial instability continues. It holds 478,401 treasury shares representing 3.08% of total shares, with no further buyback plans. The remaining convertible bond balance of 8.7 billion won poses potential dilution risk.
Hoban Construction increased its stake in Hanjin KAL to 20.15%, narrowing the gap with Chairman Cho Won-tae's group, raising the possibility of a management change. The Hanjin Group faces litigation risks worth 60.1 billion won.
[AI Summary]This bond issuance by Hanjin is an inevitable refinancing of maturing debt, providing short-term liquidity but failing to address the fundamental financial structure. The low interest coverage ratio of 0.64x and persistent net losses remain investment risks, and despite continued dividends, shareholder value could be eroded by worsening financial health.
KOSPI Filing Information
[Confirmation of Issuance Terms] Securities Registration Statement (Debt Securities)