KT doubles bond issue on overwhelming demand

2019.10.03 13:26:40 | 2019.10.04 00:57:14

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South Korea’s major mobile carrier KT Corp. doubled its bond issuance to 600 billion won ($497.1 million) on overwhelming demand, drawing investors on its high creditworthiness.

According to investment banking sources on Wednesday, KT received 1.42 trillion won worth of subscription orders from institutional investors during its book-building session, nearly five times more than its initial offering of 300 billion won.

Its three-year and five-year debt, which sought to raise 180 billion won and 70 billion won, drew 820 billion won and 280 billion won, respectively. Its 10-year bonds were oversubscribed by as much as 9.5 times and its 20-year bonds by 4.3 times.

Heartened by the strong demand, the company decided to double the amount of its offering to take advantage of the cheaper borrowing rates. The proceeds would be used to service its maturing debt, meet construction and equipment payments, and purchase set-top boxes.

Co-underwriters were Shinhan Investment, Korea Investment & Securities, NH Investment & Securities and KB Securities.

KT has a long-term rating of AAA0 (stable), the highest grade among Korean private sector players along with its industry rival SK Telecom. Credit rating agencies say the company’s steady annual earnings of 1 trillion won on sales of 20 trillion won are a major factor behind its high creditworthiness.

KT’s consolidated financial statements in the January-June period showed a net profit of 462.8 billion won, down 8 percent on year, with operating profit 13 percent lower at 690.3 billion won. Revenue gained 3.4 percent to 11.9 trillion won.

Still, market observers were optimistic of the company’s full-year performance. Korea Ratings noted that heavy investment in 5G put a slight dent on its bottom line but that given its finances, market position and liquidity status, KT is still “one of Korea’s most stable companies.”

By Kang Woo-seok and Kim Hyo-jin

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