[Photo by KOGAS]
South Korea’s state-run Korea Gas Corporation (KOGAS) has successfully sold $500 million worth of long-term U.S. dollar-denominated bonds after the rare long-term debt sale backed by high credit ratings drew great interest from international investors.
According to KOGAS on Wednesday, it on Tuesday sold 10-year global bonds worth $500 million with a maturity of 10 years expiring July 16, 2029 at a coupon rate of 2.978 percent, 92.5 basis points above the 10-year U.S. government treasury yield.
KOGAS was able to issue the bonds at a lower interest rate than the initial guidance of 120 basis points above the 10-year U.S. treasury bond thanks to the company’s high credit ratings and the scarcity of long-term bonds in the market. The coupon rate for the latest bonds were also 3.5 basis points lower than 96-basis point addition when KOGAS issued bonds two years ago.
The rare long-term debt sale by the Korean state-run utility company drew overwhelming demand from overseas investors, with 136 institutional investors placing orders worth $2.8 billion, almost 5.6 times more than the public offering.
Investors were mostly from Asia – taking up 50 percent – followed by the United States (32 percent), and Europe and the Middle East (18 percent). Investors from the U.S. and Europe interested in sustainable sector increased significantly from two years ago, the company said.
KOGAS enjoys high credit ratings awarded by global top rating agencies – Moody’s Aa2 rating, Standard & Poor’s AA rating, and Fitch Ratings Inc.’s AA- rating, which are in the same level as that of Korea’s, all with a stable outlook.
This was the first environmental, social, and governance (ESG) debt issued by a Korean state-owned company. ESG-focused bonds are investments that finance environmentally-friendly or social projects.
It was also the first dollar-denominated bond sale by KOGAS in two years after its last issuance in July 2017. It was also the two years ago when a Korean state-run company sold 10-year bonds last time.
By Lim Sung-hyun and Lee Eun-joo
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