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LH Emerges as Dominant Bond Issuer, Sparking Concerns Over Market Liquidity
Finance · Finance/Rental/Leasing · yonhap_finance · 2026-09-07
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As LH ramps up bond issuance to fund government housing projects, analysts warn of potential market crowding and upward pressure on interest rates.
What Happened
LH's Market Role: The Korea Land and Housing Corporation (LH) has become the primary issuer in the public bond market as it secures massive funding for government-led initiatives like the 3rd generation new towns. Unlike the Korea Electric Power Corporation, which is seeing improvements in its financial structure, LH faces a sharp rise in debt.
Drivers of Debt: The surge in LH's debt is largely attributed to the timing mismatch between upfront infrastructure investments and delayed capital recovery due to high interest rates and a sluggish real estate market. Projections indicate that LH's debt could exceed 370 trillion won by 2030.
Market Impact: Financial analysts are concerned that LH's aggressive bond issuance will create a 'crowding-out' effect, absorbing liquidity from the market. This could make it more difficult and expensive for other corporations to raise capital, potentially driving up overall bond yields.
Future Outlook: Market experts warn that the net issuance of LH bonds is expected to expand significantly starting next year. With the current high-interest-rate environment, the influx of LH bonds is viewed as a major factor that could exert upward pressure on market interest rates.