(Bloomberg) -- Korean borrowers are selling an unprecedented amount of dollar bonds, overtaking Chinese peers to lead Asia’s primary market issuance for such debt.

Dollar bond offerings from South Korea rose 17% to $17.6 billion so far in 2024, a record for the period, data compiled by Bloomberg show. The bond rush pushes Korea to lead such sales in Asia excluding Japan so far this year. If the trend continues for rest of the year, it will mark the first year since 2010 for Korea to sell most dollar bonds in the region.

By contrast, US-currency note sales from Chinese firms, the long-time leaders in the market, are running at their lowest in more than a decade at about $15 billion, as offshore defaults dent investor sentiment and cheaper onshore channels lure borrowers to the domestic market.

South Korea is one of the few countries in the Asia ex-Japan market where issuers are increasing dollar bond deals, as regional borrowers raise cheaper funds at home. More Korean companies are tapping dollar markets to fund overseas expansion. The firms have taken advantage of strong demand for credit globally in 2024 and a plunge in the debt sales from Asia in recent times to sell notes at tighter spreads.

“Dollar Korean primary markets are booming,” said Owen Gallimore, APAC head of credit analysis at Deutsche Bank AG. “Korean dollar bonds rallied a long way already, but performance should remain relatively good.”

Spreads on Korea dollar bonds, which have some of the strongest ratings in the region, narrowed 13 basis points to 63 basis points this week, after touching their lowest since early 2022 earlier in April, a Bloomberg index show.

The debt offerings from South Korea may climb for the full year to as much as $50 billion, a record, according to Deutsche Bank’s Gallimore. The South Korean government said Wednesday it had hired banks for a possible offshore bond sale.

Historically, Chinese borrowers have led dollar bond sales in the Asia ex-Japan market on a full-year basis since 2011, but offerings have plunged since the second half of 2021 after a crackdown by authorities on property developers led to record defaults. The last time Korean issuers were the biggest sellers of dollar notes in emerging Asia on a full year basis was 2010, but they have been for shorter periods since, data compiled by Bloomberg show.

Home entertainment and appliance giant LG Electronics Inc. priced its first benchmark-sized dollar bond offering in 17 years earlier this month, with the funds to be used for research and development and facility investments, according to the company. Its $800 million debt sale received demand that was about 12-times the size of the issue amount, according to LG. Last week, Hyundai Card Co., a part of the Hyundai Motor group, also sold its first dollar note in 17 years in international markets.

Still, the jump in borrowing by Korean firms comes as authorities in the nation try to prevent mounting bad loans in the property sector locally from causing a repeat of a credit squeeze in 2022, when a default by a developer of a Legoland amusement park drove short-term credit spreads to their highest since the global financial crisis. Investors have taken comfort in measures exceeding $66 billion to support the real estate sector and credit markets since then, but risks persist as seen in ongoing restructuring talks at mid-sized builder Taeyoung Engineering & Construction Co.

(Adds chart and details on deals.)

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