South Korea’s market for promissory notes issued by mega investment banks is expected to grow sharply this year to top the 10 trillion won ($8.5 billion) mark, industry sources said on May 13.

The outstanding value of promissory notes floated by two mega IBs -- Korea Investment & Securities and NH Investment & Securities -- came to a combined 8.5 trillion won as of end-April.

Promissory notes issued by Korea Investment & Securities accounted for 5.4 trillion won, with NH Investment & Securities taking up the remainder.

Korea Investment & Securities is seeking to raise the amount to 6 trillion won by the end of this year, and NH Investment & Securities, to 4 trillion won.

In light of their plans, the outstanding amount of promissory notes issued by mega IBs is on course to reach 10 trillion won this year.

Korean securities firms with 4 trillion won or more in assets are classified as mega IBs, which are allowed to issue short-term notes with a maximum limit of 200 percent of their capital.

Currently, there are five mega IBs in Korea. Korea Investment & Securities and NH Investment & Securities are the only ones that have received the green light to float promissory notes, whose proceeds can be used for corporate and mortgage loans.

By Ram Garikipati and newswires (ram@heraldcorp.com)