State-run Korea Expressway Corp. tapped into the Swiss negative interest rate territory and raised 203 million Swiss francs ($201 million) in seven-year bonds on favorable conditions as foreign appetite on Korean debt renewed from eased political and geopolitical risks.
According to investment bank industry sources on Thursday, the public road builder’s offering of Swiss franc-denominated bonds were snatched up within the first hour to be priced at a coupon yield of 0.250 percent, the lowest borrowing yield for Korean issues in Swiss franc. The three-month Libor target range in Swiss is minus 1.25 percent and minus 0.25 percent.
The offering was stretched to $203 million from initial $200 million due to overwhelming demand in book-building. The papers were underwritten by Swiss-based UBS. The proceeds would be used to refinance existing debt.
The last Swiss franc offering by a Korean entity was 100 million issue maturing in September 2019 by Export-Import Bank of Korea in March 2014 at a coupon of 1.125 percent.
Korean public and private companies have recently been active in global issues to ride on favorable foreign appetite for Korean debt before interest rates go higher from increases in the U.S. rates.
Korea Resource Corp. issued five-year global bond worth $425 million with a coupon of 3.00 percent on April 24, and the Korea Development Bank priced $50 million at 2.76 percent on March 31. Prior to that, Shinhan Bank and Korea National Oil Corp. issued five-year global bonds worth $500 million each at 2.875 percent.
By Park Yun-gu
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