South Korea’s policy bank, the Export-Import Bank of Korea (Kexim), has once again demonstrated its ability to move quickly to take advantage of the opportunistic market window as it priced on February 10 a CNH1 billion offering.

The three-year bonds were priced at an all-in yield of 4.40%, or at the tight end of the initial guidance of between 4.40% and 4.50%, setting a solid benchmark in the CNH market. This transaction represented the first ever CNH public bond offering out of Korea that is listed on both GreTai Securities Market and Singapore Stock Exchange. This creative approach by Kexim has certainly confirmed the potential for a larger deal size for dual-listed bonds.

The latest offering came after Kexim returned to the Formosa bond market on February 2 – a year after its debut in Taiwan – when it priced a dual-tranche issue comprising 300 million renminbi for five years at 4.05% and 500 million renminbi for seven years at 4.20%.

Kexim has continued to closely watch the CNH market to take advantage of the upward trending of CNH-USD cross-currency swap movement, which had been lingering at its historical highs in the past few weeks.

On the back of this favourable swap market and strong reverse inquiries from investors, Kexim swiftly went ahead to announce the deal during Asia afternoon on February 10 with an initial price guidance of between 4.40% and 4.50%.

The books were immediately covered and the bonds were priced within just three hours of the deal announcement at the tight end of the guidance to yield 4.40%. On an after-swap basis, Kexim achieved arbitrage funding compared to its own US dollar secondaries.

In this transaction, Kexim was able to achieve the best pricing tension for a CNH1 billion transaction with the dual-listing structure, which enabled both onshore Taiwanese investors and offshore Reg S investors to participate.

The deal garnered a final order book of over CNH1.2 billion from 28 accounts. In terms of geographic distribution, 91% of the bonds were sold in Asia and the remaining 9% in Europe – one of the largest European allocations for CNH trades seen recently. By type of investors, insurance companies and pension funds accounted for 71%, fund and asset managers 18%, banks 7%, and private banks 4%.

Barclays was the sole bookrunner for the transaction, while KGI acted as a co-manager. – CS