The overall heated Korean debt market remained selectively cool to Doosan Co., the holding entity of debt-heavy Korean conglomerate Doosan Group, as its new offering of 120 billion won ($106 million) went undersubscribed although it was structured in appealing two-year maturity with 50 basis point premium.

According to investment bank industry on Thursday, orders for Doosan’s papers stopped at 48 billion won in bookbuilding session. The remaining 72 billion won would be taken up by syndicate banks KB Securities, IBK Investment & Securities, Kiwoom Securities. Its offering of 50 basis points over the average A- debt yield of 3.302 percent also did not help to convince investors jittery about its heavy debt load and looming outlook for a downgrade in its debt rating.

Its underwriters are, however, confident of retail demand in the bonds given the heat in the debt market.

Doosan will use the proceeds to pay off bank loans due by the end of next month.

Doosan is still exposed to the liabilities of its subsidiaries. Last year, Doosan purchased assets including 117.2 billion won worth Doosan Mecatec stake and 32.5 billion won worth property lot from Doosan Engineering & Construction Co. to help ease their liquidity stress. It took over 92 billion won worth issues of Doosan Heavy Industries & Construction Co.’s bonds with warrants this year.

Four Doosan affiliates - Doosan, Doosan Heavy Industries & Construction, Doosan Engine, and Doosan Bobcat raised combined 2.3 trillion won from home and aboard this year to improve their balance sheet and for new investment.

By Park Yun-gu

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