Korea Hydro and Nuclear Power Company on October 21 priced a US$300 million bond offering, which secured the lowest coupon from a Korean corporate in the five-year maturity bucket in 2014.

The Reg S/144A deal was priced at 99.752% with a coupon of 2.375% to offer a yield of 2.428%. This was equivalent to a spread of 100bp over the US treasuries, which was in line with the final price guidance and 20bp inside the initial guidance of 120bp area.

The deal was executed following weeks of monitoring the market conditions and negotiating with the government for regulatory approvals regarding foreign currency issuance. Korea Hydro decided to announce a new five-year deal in the morning of October 21, Asia time, with an initial price guidance of 120bp area over the US treasuries.

The offering was capped at US$300 million to provide further definition to investors and despite the increased volatility in the market, the books grew rapidly with high quality orders coming in size.

As the demand reached north of US$1.2 billion, the arrangers – Bank of America Merrill Lynch, Deutsche Bank, HSBC, J.P. Morgan and Royal Bank of Scotland – released a final price guidance of 100bp. Despite representing a zero new issue concession, the investors’ appetite for the Korea Hydro paper remained resilient and even received further jolted demand from US real money accounts, adding to the already high quality order book.

On the back of strong demand, the arrangers were able to minimize the execution risk by going subject on books for Asia, Europe and the US at 4:30pm, 10am and 8.30am, respectively.

The transaction eventually generated a total demand of US$1.5 billion from 158 accounts with the bonds equally distributed in Asia 35%, Europe 33% and the US 32%. The asset managers accounted for the bulk of the paper with 60%, insurance companies 22%, banks 12%, and private banks and others 6%.

The bonds were issued under Korea Hydro’s existing US$5 billion global medium-term note programme and the proceeds will be used for general corporate purposes.

Korea Hydro is the country’s sole nuclear power generation company and wholly-owned by Korea Electric Power Corporation. As of July 31 2014, it has an installed generating capacity of 26,039MW, comprising of 20,716MW from its nuclear reactors; 5,307MW from hydro units and 17MW from renewables.