The Korean genco conducted a series of non-deal roadshows in March, and the deal was launched last week with an initial guidance of 47bp to 50bp over mid-swaps, or roughly 102bp to 105bp over 10-year treasuries.
The Reg-S 144a deal priced at 99.208% on a coupon of 6.0% to yield 6.107%. This equated to 99bp over Treasuries or 47bp over mid-swaps. Fees were 25 cents.
Market instability had pushed spreads out over the last week however that had little impact on the order book, which closed at the $700 million level with participation by 42 accounts. By geography, the order book had a split of 60% Asia, 26% US and 14% Europe. Korean investors accounted for 50% of the total Asian allocations.
In terms of investor type, banks took 42%, asset managers 40% and insurance companies 15% and public banks the remainder.
Like most smaller-sized deals, the order book was made-up of accounts that are more inclined to buy and hold the paper. The main comparable was fellow A2/A- rated genco Korea Midland PowerÆs (Komipo) March 2016 5.5% bond. This deal is considered somewhat of a sister deal to Kosepo.
KomipoÆs deal priced in March and was trading at a bid-offer spread of 98bp to 101bp over Treasuries or 46.5bp over mid-swaps, meaning that KosepoÆs new deal offers virtually no new issue premium.
Despite the mixed messages coming out of the Fed, the deal took advantage of the rally in debt markets as investors shook off relative uncertainty and took heart from the Philadelphia FedÆs index that measured employment, which came in at its weakest level since November 2002 and a higher than expected increase in initial jobless claims.
Buying in the benchmark 10-year Treasuries pushed yields back to 5.07% - a one month low, down from late WednesdayÆs 5.15%.
Kosepo is one of six energy generation entities spun off from Korea Electric Power Corp (Kepco) in 2001. In its most recent ratings report, MoodyÆs noted its strong support from Kepco, citing its strategic importance to the Korean power sector. Due to the existing cost base pool structure, Kosepo can pass on any increase in cost to its parent û Kepco û to effect stable earnings.
Funds from the deal will be used for general corporate usage, including buying further fuel imports.
Despite volatility in US Treasury yields, joint leads Barclays Capital, Citigroup and Credit Suisse took advantage of a rally in the debt markets to price Korea South-East PowerÆs (Kosepo) $300 million 10-year bond at the tight end of guidance.
The Korean genco conducted a series of non-deal roadshows in March, and the deal was launched last week with an initial guidance of 47bp to 50bp over mid-swaps, or roughly 102bp to 105bp over 10-year treasuries.
The Reg-S 144a deal priced at 99.208% on a coupon of 60% to yield 6.107%. This equated to 99bp over Treasuries or 47bp over mid-swaps.
Fees were 25 cents.
Market instability had pushed spreads out over the last week however that had little impact on the order book, which closed at the $700 million level with participation by 42 accounts.
By geography, the order book had a split of 60% Asia, 26% US and 14% Europe. Korean investors accounted for 50% of the total Asian allocations.
In terms of investor type, banks took 42%, asset managers 40% and insurance companies 15% and public banks the remainder.
Like most smaller-sized deals, the order book is relatively constrained and is made-up of accounts that are more inclined to buy and hold the paper.
The main comparable was fellow A2/A- rated genco Korea Midland PowerÆs (Komipo) March 2016 5.5% bond. This deal is considered somewhat of a sister deal to Kosepo.
KomipoÆs deal priced in March and was trading at a bid offer spread of 98bp to 101bp over Treasuries or 46.5bp over mid-swaps, meaning that KosepoÆs new deal offers almost nothing in terms of a new issue premium.
Despite the mixed messages coming out of the Fed, the deal took advantage of the rally in debt markets as investors shook off relative uncertainty and took heart from the Philadelphia FedÆs index employment component, which came in at its weakest level since November 2002 and higher than expected increase in initial jobless claims.
Buying in the benchmark 10-year Treasuries pushed yield down to 5.07%, a month low, down from late WednesdayÆs 5.15%.
Kosepo is one of six energy generation entities spun off from Korea Electric Power Corp (Kepco) in 2001.
In its most recent ratings report, MoodyÆs noted its strong support from Kepco, citing its strategic importance to the Korean power sector.
Due to the existing cost base pool structure, Kosepo can pass on any increase in cost to its parent û Kepco û to affect stable earnings.
Funds from the deal will be used for general corporate usage, including buying further fuel imports.
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