South Korean Companies Piled Into Short-Term Debt in Q1 Even as Kospi Hit Record Highs

South Korea's stock market has been on a tear. The Kospi kept hitting record highs through the first half of 2026. Meanwhile the companies actually listed on that index were scrambling for short-term cash like the party wasn't happening.

Short-term borrowing among 2,518 listed Korean companies hit 439.6475 trillion won in the first quarter, up 40.6911 trillion won, or 10.2%, from 398.9563 trillion won at the end of last year, according to financial data provider FnGuide as reported by Sedaily. That's a bigger jump in three months than the entire prior year produced. Full-year increases in short-term debt typically run 20 trillion to 60 trillion won. This year did 40 trillion won in one quarter.

Samsung Electronics increased short-term borrowing 11.2%, from 17.5750 trillion won to 19.5463 trillion won. SK Hynix rose 5.3%, from 2.3958 trillion won to 2.5223 trillion won. Naver's short-term debt surged more than 17-fold, from 132.2 billion won to 2.3262 trillion won, according to the same FnGuide figures.

CJ CGV pulled in 50 billion won in February and 400 billion won in March through short-term borrowing, using the funds to pay off previously issued commercial paper, Sedaily reported. That's a company rolling debt to pay off other debt, not a sign of a business firing on all cylinders.

Why companies are doing this

Analysts cited by Sedaily point to a widening gap between short-term and long-term interest rates. Surging international oil prices, driven by geopolitical tensions in the Middle East, have stoked inflation fears. That's pushed global central banks toward signaling more rate hikes, which makes long-term borrowing look expensive and risky by comparison.

So companies are opting for commercial paper and short-term electronic bonds instead of issuing corporate bonds. It's a bet, essentially, that current conditions will improve before the short-term debt needs to be rolled over again. A high exchange rate is adding to the pressure, making it more attractive for firms to grab working capital fast rather than lock in long-term financing at today's rates.

The bank lending problem underneath

Separately, a Korea Chamber of Commerce and Industry survey released July 30 found 43.6% of companies say commercial bank borrowing is now the toughest funding channel to access, more than corporate bonds (19.6%), stock issuance (14.2%), policy financing (11.8%), or equity investment (2.9%), according to BigGo Finance's reporting on the survey.

The survey covered 204 non-financial companies, split evenly between listed and unlisted firms. Nearly half, 48.5%, named high interest costs on loans as their single biggest pain point.

Stock issuance including IPOs and rights offerings totaled just 2.66 trillion won from January through May, according to South Korea's Financial Supervisory Service as cited by BigGo. That's a 30.7% drop from 3.84 trillion won in the same stretch last year. The Kospi is setting records, and companies are raising less money through the stock market, not more.

Only 31.4% of surveyed firms said the stock rally had a "positive impact" on their business. More than half, 53.9%, said it made no significant difference at all.

What's happening, what's contested

A booming index and a healthy corporate funding environment are two separate things. Korea currently has one without the other. None of the reporting alleges fraud, mismanagement, or wrongdoing at any of these firms. This is a liquidity and rate-environment story, not a scandal. Companies including Samsung, SK Hynix, and Naver are large, well-capitalized firms rolling short-term debt for reasons tied to macro conditions, not because they're in distress.

The Chamber of Commerce survey pushes a specific policy ask: ease bank risk weightings to expand corporate lending. That's the industry's preferred fix, and it's worth treating as an interested party's position, since banks bearing more risk is exactly the kind of thing that gets scrutinized after credit cycles turn ugly. Whether loosening those weightings is prudent or reckless is a real policy debate.

If short-term rates stay elevated or oil prices keep climbing on the back of Middle East tensions, experts warn a sustained rise in short-term debt could translate into real financial risk for companies already facing weak business conditions, like CJ CGV. Whether that risk stays contained to struggling firms or spreads to healthier balance sheets is something to watch as the second half of the year plays out.