Marketed to investors at a level of around 112bp over treasuries, the deal was shopped via two roadshow teams in London and Singapore and Hong Kong this week.
The unsubordinated, unsecured notes, rated A-/A3, priced at 97.743% on a coupon of 5.875% to yield 6.181%, equating to a spread of 110bp over Treasuries.
This deal further enhances KTÆs already strong yield curve. In fact at 110bp, the new deal prices almost flat to its own existing July 2015 bond. That deal - a $400 million 10-year Reg S offering - originally priced at 98.086% on a coupon of 4.875% to yield 5.122%. This equates to 98bp over 10-year US treasuries or 55bp over Libor.
The deal was five-times oversubscribed with an order book in excess of $1 billion. 70 accounts took part, with two-thirds of the total book going to Asian investors and the remaining third heading to Europe.
In terms of investor type, banks bought 44%, asset managers 33% with the remainder going to insurers and others.
The leads were able to take advantage of an increasingly positive sentiment in the debt capital markets as well as the optimistic opinion the market has toward KT CorpÆs existing deals which have performed well in secondary trading.
Market sentiment has been on the rise in recent sessions bolstered by the strong performance of new debt issues and the recent ratings outlook upgrades in South Korea and Hong Kong.
For the time being risk aversion has seemed to ebb away as emerging market debt yield spreads have tightened almost four basis points to the respective US treasuries. JPMorganÆs Emerging Markets Bond Index is currently sitting at 178bp.
Indeed, in its first day of trading, the new deal had already tightened 2-3bp quoted at 107/108bps over.
KT is KoreaÆs primary fixed-line operator, while concurrently enjoying leading market shares in the domestic broadband and a second place ranking in the mobile phone market via its controlling stake in KTF. KTÆs revenue is predominantly derived from its fixed-line business, but has seen those numbers dip in recent years as competition has increased and the general public has become more reliant on wireless services. Consequently, KT has had to diversify its revenue sources, augmenting them with a renewed focus on broadband and mobile phone networks as well as devoting increasing capital to the expansion of its wireless broadband networks.
The notes were issued off of KTÆs $2 billion global MTN programme.
