À̹ÌÁö È®´ë Image of KEPCO building
Deficit-stricken Korea Electric Power Corp. (KEPCO) has issued two- to three-year bond below the market yields for the first time in nearly 18 months to suggest easing in the glut in the debt market through state-led multibillion-dollar relief program.
KEPCO on Monday sold two-year bonds worth 330 billion won ($246.6 million) at a coupon rate of 5.34 percent, 5 basis points below the market average of 5.39 percent. It also sold three-year papers worth 160 billion won at 5.35 percent, 4.8 basis points below the 5.398 percent market average. Bids were overwhelming respectively at 1.15 trillion won and 580 billion won.
¡°It must be more than one and a half year since KEPCO papers were issued at below the market rate,¡± said an unnamed official from a securities firm.
The outstanding three-year bonds yielded an average 5.4 percent Monday.
On Nov. 23, KEPCO had sold two-year bonds worth 370 billion won at a coupon of 5.6 percent and three-year papers worth 90 billion won at 5.65 percent. Bids stopped at 810 billion won and 330 billion won each.
Other public bonds sharing the top-tier investment grade also were sold below the market rate.
Korea Asset Management Corporation (KAMCO) sold two-year maturity papers at 3 basis points lower than the market average rate of 4.978 percent. The papers were issued at 4.898 percent on Monday based on the previous session¡¯s closing rate.
The government has vowed minimum 50 trillion won bond relief package amid widening liquidity woes. State lenders and institutional investors will refuel bond stabilization fund by another 5 trillion won next month on top of 3 trillion won this month. The Bank of Korea will extend another 2 trillion won in repurchase agreements to back liquidity of institutional investors after earlier 6 trillion won.
The additional move came as the yields on short-term papers continue to soar amid concerns for insolvency in project financing debt worth 20 trillion won due next month. The 91-day CP yield hovers at 13-year high of 5.5 percent. The unsecured AA- three-year corporate bond yielded at 5.388 percent on Monday.
The government bond yield curve meanwhile has been inverting, with the shorter-duration bonds exceeding the longer-dated ones. An inversion in debt yield curve takes place usually when the market prices in a recession on the horizon.
The two-year government bond yielded at 3.776 percent, above the three-year yield of 3.666 percent. The three-year bond yielded at 3.648 percent, above 10-year yield of 3.619 percent. The three-year bond yield has been above the 10-year yield since September for the first time since July 2009.
[¨Ï Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]