Korean Air’s BBB+ bonds oversubscribed amid revived debt appetite

2021.04.08 13:50:43 | 2021.04.08 15:06:45

[Photo by Kim Jae-hoon]이미지 확대

[Photo by Kim Jae-hoon]

South Korea’s flag carrier Korean Air Lines Co. is expected to scale up its debt issue after its multi-tranche domestic offering of BBB+ gauged heated institutional demand amid improved appetite for sub-investment-grade or speculative issues by Korean Inc.

The air carrier drew near 700 billion won ($625.95 million) orders from institutions during a book building session, more than tripling its 200 billion won worth offer, according to sources from the investment banking industry on Wednesday. The company on Monday announced its plan to offer corporate bonds in three tranches—60 billion won in 18-month date, 80 billion won in two years, and 60 billion won in three years.

The 18-month note drew 133 billion won worth bids, two-year paper 358 billion won and three-year maturity 198 billion won.

The overwhelming subscription will likely bring down the borrowing rates by 40 to 68 basis points from its guidance of each at 2.759 percent, 3.307 percent and 3.954 percent.

KB Securities, NH Investment & Securities, Korea Investment & Securities, HI Investment & Securities, DB Financial Investment, and Kiwoom Securities are joint book runners.

Korean Air debt sale is another sign of improving appetite for Korean bonds from the bottom tier of investment grade.

Doosan Infracore going under Hyundai Heavy Industries drew 286 billion won bids for its 110 billion won in BBB-rated offering in February and another 252 billion won for 120 billion won offering in March. Its December offering in 150 billion won attracted just 1 billion won worth.

Hanshin Construction and Hanjin KAL bumped up their BBB0 offering in February. DB Capital, another BBB0-grade, raised its maiden issue to 50 billion won from its plan of 30 billion won after it received bids of 91 billion won.

By Ahn Gab-seong and Lee Soo-min

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