Korean companies increasingly opt to raise funds by issuing corporate bonds outside the country as it takes lower costs, a local asset-management association said Tuesday.

Companies, such as Kia Motors, Hanwha Chemical and Doosan Heavy Industries & Construction, have raised funds by selling debts to overseas institutional investors, according to the Korea Financial Investment Association (KOFIA). 

"As base rates in the United States and Europe are much lower than the (current) key rate of 1.50 percent in Korea, domestic companies have good reasons to issue corporate bonds, which carry lower interest rates in global markets," KOFIA manager Kim Young-min said.

Kia Motors, the country's second-biggest carmaker by sales after Hyundai Motor Co., has recently issued $700 million worth of corporate bonds in global markets to repay its maturing debts worth $500 million in June.

Doosan Heavy Industries, a leading seawater desalination plant builder, raised $800 million by issuing corporate bonds last year. Hanwha Chemical recently issued bonds valued at $100 million to pay back its maturing debts and bank loans.

"More companies are expected to go overseas to benefit from near-zero rates in advanced countries when they raise necessary capital," Kim said. (Yonhap)