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Korea Exchange Bank said on Tuesday it successfully issued bonds worth $700 million to foreign investors in its biggest dollar-denominated offering despite growing uncertainties stemming from the European fiscal crisis.
In its first attempt to issue global bonds since it was acquired by Hana Financial Group in February, KEB sold 3.125 percent, five-year notes at a relative yield of 255 basis points more than similar-maturity U.S. Treasuries.
KEB initially offered a yield of 275 basis points higher than five-year U.S. treasury bonds (T5) on Monday, but strong demand pushed down the yield.
The demand for the KEB bonds reached $5.5 billion, about 7.8 times the actual offering.
Sixty-nine percent of the bidders were private equity funds, 11 percent banks, nine percent insurance companies, seven percent private banks and four percent others.
Fifty-five percent of the bidders were from Asia, 17 from Europe and 28 percent from the U.S. Middle Eastern investors from 13 institutions bid for about $100 million.
The Greek election results helped Korea’s fifth-largest commercial lender by assets issue the bonds at a low yield.
“It appears that a lot of investors made bids for our bonds as the pro-bailout New Democratic party’s win in the Greek elections eased concerns over the country’s exit from the eurozone and Korea’s international credit ratings were raised recently,” a KEB official said.
“We expect the successful bond sale to help raise the credit rating of KEB.”
Hana Bank, rated a notch higher than KEB by Standard & Poor’s, issued 5.5-year bonds worth $500 million at a yield of 265 basis points over comparable U.S. Treasuries in April. Hana and KEB are rated A1 and A2 by S&P, respectively.
KEB last issued fixed-rate, dollar debt in July 2010, selling $500 million of 4.875 percent securities due January 2016. The sale was then the bank’s largest dollar-denominated bond offering on record.
Bank of America Corp., Citigroup Inc., HSBC Holdings Plc, ING Groep NV, KEB Asia Finance and Morgan Stanley managed the sale this time. The bonds are rated A2 by Moody’s Investors Service and A- by Standard & Poor’s.
By Kim So-hyun (sophie@heraldcorp.com)
In its first attempt to issue global bonds since it was acquired by Hana Financial Group in February, KEB sold 3.125 percent, five-year notes at a relative yield of 255 basis points more than similar-maturity U.S. Treasuries.
KEB initially offered a yield of 275 basis points higher than five-year U.S. treasury bonds (T5) on Monday, but strong demand pushed down the yield.
The demand for the KEB bonds reached $5.5 billion, about 7.8 times the actual offering.
Sixty-nine percent of the bidders were private equity funds, 11 percent banks, nine percent insurance companies, seven percent private banks and four percent others.
Fifty-five percent of the bidders were from Asia, 17 from Europe and 28 percent from the U.S. Middle Eastern investors from 13 institutions bid for about $100 million.
The Greek election results helped Korea’s fifth-largest commercial lender by assets issue the bonds at a low yield.
“It appears that a lot of investors made bids for our bonds as the pro-bailout New Democratic party’s win in the Greek elections eased concerns over the country’s exit from the eurozone and Korea’s international credit ratings were raised recently,” a KEB official said.
“We expect the successful bond sale to help raise the credit rating of KEB.”
Hana Bank, rated a notch higher than KEB by Standard & Poor’s, issued 5.5-year bonds worth $500 million at a yield of 265 basis points over comparable U.S. Treasuries in April. Hana and KEB are rated A1 and A2 by S&P, respectively.
KEB last issued fixed-rate, dollar debt in July 2010, selling $500 million of 4.875 percent securities due January 2016. The sale was then the bank’s largest dollar-denominated bond offering on record.
Bank of America Corp., Citigroup Inc., HSBC Holdings Plc, ING Groep NV, KEB Asia Finance and Morgan Stanley managed the sale this time. The bonds are rated A2 by Moody’s Investors Service and A- by Standard & Poor’s.
By Kim So-hyun (sophie@heraldcorp.com)
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Articles by Korea Herald
