SK Hynix Swap Financing Costs Reportedly Halve from June Peaks

Swap financing costs for SK Hynix, which surged to nearly 15% in June, are now reported to have roughly halved, although this claim remains unverified by named sources. Major global banks, including Citigroup, JPMorgan, and Goldman Sachs, had significantly increased these costs in response to a rapid rise in SK Hynix shares, which more than tripled in value earlier this year due to heightened demand for high-bandwidth memory chips used in AI applications.

In mid-June, swap financing rates escalated from around 100 to 200 basis points over SOFR to as high as 750 to 1000 basis points. This tightening of terms was part of a broader strategy by banks to manage concentrated leveraged exposure in the Korean chip sector. Morgan Stanley even ceased writing new swaps on SK Hynix and Samsung Electronics, while other banks restricted trade sizes and client access due to balance sheet constraints.

Following a successful $26.5 billion listing on Nasdaq in July, led by the same banks that raised financing costs, SK Hynix has seen its stock price decline sharply. In response, the company has indicated plans for additional shareholder returns, including stock buybacks. The reported decrease in swap financing costs to a range of 150 to 300 basis points over SOFR suggests a potential easing of risk appetite among banks, although further confirmation is needed to validate this development.

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Source: KLEA News