State-backed bond purchase program fails to warm up the debt market rated below investment grade as Hanhwa Construction was unable to price its A- papers worth 100 billion won ($81 million) after gathering zero bids from institutions in book-building session.

The South Korean builder has offered 100 billion won worth debts in two tranches – two-year bonds at a yield band of 3.1~3.6 percent and three-year maturity in a band of 3.6~3.9 percent on Friday. Pricing was not possible due to zero bids.

It was the first time for corporate debts to be completely shunned by institutions since Daishin F&I Co. offering in 2015.

The underwriters will have to repackage the offering for public sale.

Debt-financing for companies rated below investment grade remains hard despite a 20-trillion-won bond purchase program that mostly cherry-picked on higher-grade papers.

The Bank of Korea will join the creation of another quantitative easing program to purchase bonds issued by lower-grade bonds.

By Kang Woo-seok and Cho Jeehyun

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