Polaris Shipping`s $67 mn debt undersubscribed, third in Korean B-tier group

2019.09.10 14:01:42 | 2019.09.10 14:59:03

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New BBB+ debt offering by Korean mid-sized shipper Polaris Shipping Co. was undersubscribed, raising alarm about a change in investors’ confidence in Korean debt and higher borrowing rates due to uncertainties in the economy.

The debt offered in three tranches - 20 billion won ($16.8 million) in one-year, 40 billion won in two-year and 20 billion in three-year maturities were undersubscribed by 20 percent. It made the third in the B-tier group in Korean papers to fail to sell full offering after Hanjin Transportation and Korean Air Lines, according to sources on Monday.

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Polaris Shipping has sound financial health and its bonds have been generally popular, but investor sentiment over BBB-category issues soured after the debt offering by Hanjin Transportation and Korean Air Lines in July failed to attract enough interest, a market expert said.

Market analysts think the sub-A issuers from Korea failed to win over investors because their pricing term did not offset concerns for risks in the debt.

Another mid-sized construction company Hanyang Corporation with credit rating of BBB+ entirely sold 20 billion won worth bond with bids at 27 billion won because it offered a coupon of more than 5 percent.

Hanwha E&C is the next in the pipeline from the BBB group, with pricing for 80 billion won due on Tuesday.​

By Chung Seok-hwan and Lee Ha-yeon

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