According to the Korea Securities Depository, short-term securities with residual maturities of less than 89 days — those maturing within this year — stood at 268.34 trillion won as of Sept. 22, or 70.6% of total outstanding issuance of 380.334 trillion won. Commercial paper (CP), short-term bonds and asset-backed commercial paper (ABCP) maturing this month alone amount to 181 trillion won, up 29.1% from 140 trillion won in September last year.
The buildup reflects heavier reliance on short-term funding instruments such as CP and short-term bonds by both non-financial companies and financial firms. Corporate funding via CP and short-term bonds reached 12.1 trillion won in January-July this year, up 37.5% from 8.8 trillion won a year earlier and the largest amount in four years, since 2022. By contrast, corporate bonds — a long-term funding tool — swung from net issuance of 5.5 trillion won in January-July last year to net redemptions of 16.2 trillion won in the same period this year.
Within the financial sector, concerns center on card companies. Bank of Korea analysis showed the share of card bonds issued with maturities of two years or less rose from 3.6% at the end of June 2025 to 19.7% at the end of December, then to 52.4% at the end of June this year. Card bonds maturing in the second half of this year total 15.1 trillion won, above the 2020-2025 average of 10.5 trillion won. At the company level, Samsung Card's short-term funding ratio more than doubled, from 5.04% at the end of last year to 10.26% at the end of June. Over the same period, Shinhan Card's rose from 3.71% to 8.63% and Hyundai Card's from 4.07% to 6.04%.
The surge in short-term funding this year stems from a wider gap between short- and long-term rates. In the first half, short-term market rates rose only modestly as ample short-term liquidity — helped by strong semiconductor exports — capped increases, while long-term rates climbed sharply as term premiums widened on concerns over fiscal deficits at home and abroad.
The problem is that a higher share of short-term funding leaves borrowers more vulnerable to market volatility, including rate increases. Funds must be raised again at each maturity, and both the amount available and rate terms can shift with market conditions. "The shorter the funding maturity, the faster rate increases or weakening investor sentiment feed through into funding costs and liquidity," a financial market official said. "When most companies and financial firms are funding short, as they are now, even a small external shock can amplify market instability."
Market rates are indeed rising quickly after the European Central Bank moved on Sept. 11, followed by the U.S. Federal Reserve and the Bank of Japan. Greater equity market volatility adds to the risk. Wider investment losses at households and companies could trigger outflows and derivatives margin calls, lifting securities firms' funding needs and pushing market rates higher.
Lower-rated companies are also more dependent on short-term funding. Nice Investors Service data show that as of the end of June, AA-rated companies had short-term borrowing ratios of 30% to 40%, while BBB-rated issuers were well above 50%. Bank of Korea research found marginal companies' reliance on market funding rose from 11.7% in 2023 and 13.7% in 2024 to 18.4% last year.
"We need to watch for rising refinancing risk at companies heavily reliant on market funding and strengthen monitoring of lending to vulnerable industries," a Bank of Korea official said.
