State-owned Korea National Oil Corporation (KNOC) has sold 200 million Swiss franc-denominated bonds ($205 million) in favorable rate from oversubscription, giving hope for revived overseas financing demand for investment-grade Korean companies.

The state oil and gas distributor issued five-year bonds at a fixed coupon of 0.875 percent in Switzerland, 140 basis points above the five-year mid-swap rate, according to investment banking sources on Sunday. It had upped the offering by 33 percent from initial 150 million Swiss franc due to oversubscription. The sale was led by UBS Securities.

The news can encourage other Korean companies to tap overseas debt market that had been soured from coronavirus panic.

State-run Korea Resources Corp. (KORES) suspended offering of about 300 million Australian dollar-denominated Kangaroo bonds ($181 million) in late February amid unfavorable market conditions from global virus scare. No Korean company has attempted debt sale since then.

Market analysts expect KNOC’s latest debt sale would serve as a benchmark for Korean issues and can set the mood for future Korean issuers at a time of growing market uncertainty from coronavirus concerns.

“Although the debt issue had not been able to issue at a rate cheaper than its desired band, its sale broke the silence dominating the debt market for a month from the virus scare, which can be an encouraging news for others that need to raise foreign funds within the first half of the year,” said a market insider.

Hyundai Capital America Inc., the U.S. operation of Hyundai Motor Group’s auto financing unit Hyundai Capital, is the next in the pipeline with a $1.8 billion bond offering in the U.S. on Tuesday. Others preparing debt offerings include KORES (Kangaroo bonds), Tongyang Life Insurance (perpetual bonds), Shinhan Bank (global bonds), and Korea Expressway Corp. (Kangaroo bonds).

“The premium on Korea’s sovereign credit default swap (CDS) is heading lower than those of bonds issued in the U.K., France and Japan. Investors turned positive about Korean issues from a month earlier amid Korea’s prompt responses to contain the pandemic earning praises from the world,” said a market expert.

By Kang Woo-seok and Lee Ha-yeon

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]