Korean corporate debt market gains heat before rates go higher

2022.01.20 13:57:26 | 2022.01.20 13:58:09

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South Korea’s corporate bond market has gained life after earlier year-end hiatus amid rising interest rate environment, enabling even the lower-investment grade issuers to raise funds.

Korean Inc. has been rushing into the debt market from the beginning of the year to raise funds before interest rates go higher and against ongoing uncertainties from supply bottleneck and protracted pandemic crisis.

S-Oil Corp., a Korea petroleum and refinery company of AA0 grade, is returning to the debt market in 18 months. It plans multi-tranche offering in five-year, seven-year, and ten-year maturities. NH Investment & Securities, KB Securities, Shinhan Financial Investment, and Mirae Asset Securities are the underwriters readying book-building on Feb. 9 for issues on Feb. 17.

Factory machinery and automotive parts producing units under Hyundai Motor Group, Hyundai Transys and Hyundai Wia are offering AA- papers of up to 250 billion won ($299 million) and 400 billion won respectively. Hyundai Transys will price the offering on Feb. 16 and Hyundai Wia on Jan. 26

Financial issuer Mirae Asset Securities plan book-building on Jan. 18 for 300 billion won worth AA+ offering in three, five, and seven maturities.

Sub-investment issuers have also joined the pipeline.

Hyundai Rotem Co. (BBB+), an affiliate of Hyundai Group and railway system and plant equipment maker, Hanjin Group (BBB+) behind Korean Air Lines, and Doosan Corp. (BBB) drew bids worth 526 billion won for their offerings last week. Hanjin received orders nearly twice the offering.

Demand for high-yield bonds has risen in line with the brewing IPO market with blockbusters like LG Energy Solution, Hyundai Engineering and Hyundai Oilbank readying to join the Kospi in the first half.

By Kim Myung-hwan and Susan Lee

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