Q1 ELS Redemptions Rise 45% as Stock Market Gains Trigger Early Repayments

The issuance of derivative-linked securities and bonds by domestic brokerage firms is on a steady upward trend, supported by a recovery in investor sentiment.

According to the Financial Supervisory Service on Wednesday, July 8, the total issuance of derivative-linked securities and bonds in the first quarter of this year reached 19.6 trillion won, an increase of 3.8 trillion won (24.1%) compared to the same period last year.

By type, 6.7 trillion won in derivative-linked securities were issued, up 1 trillion won (17.5%) from the previous year.

The issuance of Equity-Linked Securities (ELS) rose by 700 billion won (14.6%) to 5.5 trillion won.

In terms of underwriters, brokerage firms accounted for the largest share at 3.5 trillion won (52.2%), followed by banks (900 billion won, 13.5%) and asset management firms (900 billion won, 13.4%).

The proportion of underwriting by brokerage firms increased by 11.8 percentage points (p), while the proportion by banks decreased by 16.3 percentage points (p).

The issuance of derivative-linked bonds reached 12.9 trillion won, an increase of 2.8 trillion won (27.7%).

Of this, the issuance of Equity-Linked Bonds (ELB) grew by 43.1% to 7.3 trillion won.

The total redemption amount for derivative-linked securities and bonds was 20.6 trillion won, an increase of 7.9 trillion won (62.2%) from the same period last year, following the rise in issuance.

Redemptions of derivative-linked securities reached 7.1 trillion won, an increase of 2.5 trillion won (54.3%).

For ELS, the flagship product, redemptions rose by 44.7% to 5.5 trillion won.

Of this amount, early redemptions accounted for the vast majority (96.4%) due to the rise in domestic and international stock prices.

Redemptions of derivative-linked bonds stood at 13.5 trillion won, an increase of 5.4 trillion won (66.7%).

ELB redemptions increased by 78.3% to 8.2 trillion won.

As of the end of the first quarter, the outstanding balance of derivative-linked securities and bonds was 93.5 trillion won, a decrease of 1.6 trillion won (1.7%).

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.