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Treasury & Capital Markets
Kexim prices first US dollar debt offering in 2018
Three-year floating rate note of US$800 million
Chito Santiago 24 May 2018

One of South Korea's policy banks, Export-Import Bank of Korea (Kexim), tapped the US dollar public debt market for the first time this year when it priced on 23 May a US$1.5 billion dual tranche offering, representing the largest US dollar issuance by a Korean issuer so far in 2018.

The SEC-registered deal consisted of a three-year floating rate note (FRN) amounting to US$800 million, which was priced at a spread of 57.5bp over the three-month US dollar Libor. This was the largest ever FRN tranche issued by a Korean issuer and the final spread was 22.5bp tighter than the initial guidance of 80bp. The second tranche was a five-year FRN amounting to US$700 million, which was priced at a spread of 77.5bp over the three-month US dollar Libor. This was also 22.5bp inside of the initial guidance of 100bp.

While Kexim typically issued US dollar public offering in early part of the year, it has been relatively active in other currency markets such as the Swiss franc, CNH Formosa and US dollar Formosa bond markets in 2018.

In February, for instance, it priced a five-year CHF350 million (US$372 million) offering with a coupon of 0.253%. In deciding to access the CHF bond market at that time, Kexim noted that US treasuries were back to levels not seen since 2014, turning the global markets choppy across all asset classes.

The latest transaction was launched just after the Asian markets opened in the morning of 23 May. On the back of solid investor demand, the deal generated a final order size of over US$2.6 billion across 168 accounts.

In terms of geographic distribution, 49% of the bonds were allocated in Asia, 36% in EMEA and 15% to US-based accounts. By type of investor, central banks, sovereign wealth funds and agencies accounted for 59% of the paper, while banks took 22% and other investors 19%.

The structure used in the transaction — dual tranche offering of FRNs only — was the first of such kind executed by a Korean issuer, which reflects continuing investor appetite for FRNs in anticipation of further US interest rate hikes amid the volatile market environment. Citi, ING, J.P. Morgan, Korea Development Bank, Morgan Stanley and Societe Generale CIB acted as joint bookrunners for the transaction.

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