South Korea's LH expands bond issuance amid financial strain

April 16 (Asia Today) -- South Korea's state housing developer is stepping up bond issuance in domestic and overseas markets as financial pressures mount amid an expanded public housing program.

The Korea Land and Housing Corporation said it is broadening funding channels to secure liquidity, as rising costs tied to large-scale housing projects weigh on its balance sheet.

The agency recently issued 100 million Swiss francs ($110 million) in bonds, becoming the first South Korean public institution to tap the Swiss franc market this year. It previously issued €500 million ($540 million) in euro-denominated bonds in 2024 and expanded into South America in 2023 with 650 billion won ($480 million) in Brazilian real-denominated bonds.

Officials said the strategy aims to reduce reliance on specific markets and improve flexibility in managing interest rate and currency risks by raising funds in multiple currencies.

LH has also been an early issuer of ESG-linked debt in the domestic market, including social bonds and green bonds, to align its housing mission with growing investor demand for sustainable finance.

However, the expanded fundraising reflects a deteriorating financial position. The agency reported a net loss of 641.3 billion won ($480 million) in 2025, reversing from a profit a year earlier.

Total debt rose from 152.8 trillion won ($114 billion) in 2023 to 160.1 trillion won ($119 billion) in 2024 and reached 173.7 trillion won ($129 billion) in 2025.

A major factor has been mounting losses from public rental housing operations. Annual rental losses increased from 2.2 trillion won ($1.6 billion) in 2023 to 2.7 trillion won ($2.0 billion) in 2025, reflecting rent controls and rising maintenance costs.

Supply pressures are also expected to persist. This year's planned public rental housing supply of 7,779 units covers only about 8.3% of last year's waiting list of more than 93,000 applicants, underscoring the need for further expansion.

At the same time, large-scale projects - including third-phase new town developments and a plan to supply 1.35 million homes in the Seoul metropolitan area by 2030 - are limiting the agency's ability to improve profitability.

As a result, LH's funding needs are rising rapidly. Its bond issuance in the first quarter totaled 4.18 trillion won ($3.1 billion), up 178% from 1.50 trillion won ($1.1 billion) a year earlier.

Some analysts caution that expanding overseas borrowing carries risks. Currency fluctuations can increase repayment burdens in won terms, while hedging costs may rise as global interest rate gaps widen.

An LH official said the agency plans to raise funds in line with project spending needs while diversifying financing tools, including overseas bonds, medium- to long-term commercial paper and structured debt instruments.

-- Reported by Asia Today; translated by UPI

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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260416010005139

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This story was originally published April 16, 2026 at 5:04 PM.