Direct financing by South Korean companies soared 23 percent in September from a month earlier, as large firms opted to raise funds through bond sales on the back of lower borrowing costs, the financial regulator said Monday.

Local companies raised a combined 10.8 trillion won ($10.1 billion) via selling stocks and bonds last month, compared with 8.8 trillion won the previous month, according to the Financial Supervisory Service (FSS).

The on-month rise came as large companies increased bond sales as a means of securing ample liquidity since bond yields declined after the U.S. Federal Reserve hinted at keeping the easing cycle for a while longer to avert sudden market volatility. 

Bond yields here and abroad had spiked in the lead up to the Sept. 17 Fed meeting, when investors highly expected the U.S. central bank to begin scaling back its bond-buying program.

Thanks to the Fed's decision to put off the stimulus cut, corporate bond issuances in Seoul hit a five-month high at 5.38 trillion won in September, up 89.4 percent from a month earlier, as large companies increased debt sales on favorable market conditions, the FSS said.

But companies remained reluctant to raise money through selling stocks largely due to a lack of demand, the watchdog said. Only six companies listed on the secondary KOSDAQ financed 76 billion won last month through initial public offering (IPO) and rights offering which was down 13.3 percent compared with August.

On a cumulative basis, Korean firms secured 86.2 trillion won through direct financing for the first nine months of this year, down 13.1 percent from the same period a year earlier, the FSS added. (Yonhap News)