Korea Hydro sees high demand for debt sale

By Song Jung-a in Seoul
Published: June 10 2009 18:33

Korea Hydro & Nuclear Power is selling up to $1bn of US dollar bonds in a deal that marks the country’s biggest corporate debt issue this year, people close to the deal said on Wednesday.
The state-run company has cut its guidance for the five-year debt’s yield to 362.5-375 basis points over US Treasuries. Korea Hydro, the unit of electricity provider Korea Electric Power Corp, offered about 400bp over US Treasuries this week.
The tighter guidance came as Korea Hydro attracted more than $8bn in orders for the debt sale.
Barclays Capital, Citigroup, Deutsche Bank and Goldman Sachs are arranging the deal and KDB is an additional co-lead manager.
Bankers expect more debt issues by state-run Korean companies in the coming weeks. State-run Korea National Oil Corp might issue dollar bonds as it is considering a takeover or asset deal with Addax Petroleum, an oil exploration and production group. Korea Gas is also thought to be planning a $500m dollar bond issue in June.
South Korean companies are tapping international debt markets in record numbers amid growing investor appetite for dollar-denominated issues from Asia’s fourth-largest economy. According to Dealogic, a record $12.8bn has been raised by Korean companies through 35 dollar-denominated bond issues this year.
“Korean issues are leading the way in re-opening the Asian credit market with investors from the US, Europe and Asia, whose risk appetite is returning on the back of successful transactions,” said John Kim, head of Korea Investment Banking at Goldman Sachs.
“In conjunction with the wider global market sentiment, there is a clear improvement of confidence in the Korean economy and its issuers.”
Government officials are becoming increasingly optimistic about the economic outlook after the Korean economy grew 0.1 per cent in the first quarter on a sequential basis.
A recovery in the Korean won, one of the best performing Asian currencies against the dollar this year, has soothed fears about overseas borrowings by Korean companies.
Korean financial companies are also rushing to refinance their existing debt, encouraged by improving market conditions.
Woori Bank plans to offer subordinated debt this week in exchange for $400m of notes that it did not redeem in March due to “adverse” market conditions.
The bank will offer 7.63 per cent notes maturing in April 2015.
Copyright The Financial Times Limited 2009