Korea's state-owned policy lender Small and medium Business Corporation (SBC) returned to international bond markets for the first time in a decade on Monday, successfully refinancing debt falling due next month at a cheaper rate.
The issuer, which is rated Aa2/AA/AA- by Moody's/S&P/Fitch, raised $500 million from the sale of a 10-year bond, adding to the region's steady stream of capital raisings as investors fish for income-generating instruments.
SBC is a non-profit government-controlled agency that looks after the interests of Korea's SME sector, in line with the Seoul government's policies. At the end of last year the lender had total assets of KRW16 trillion ($14.5 billion), comprising mainly of SME loans.
The Reg-S deal drew more than $3.75 billion in orders at its peak, according to two bankers familiar with the deal, highlighting the strong current investor demand for Asian dollar credits, both in the region and beyond.
"Negative rates in Europe and Japan have propelled Asia investors to search for positive returns in the region," one of the syndicate bankers told FinanceAsia.
Data from EPFR shows that a record amount of $20 billion poured into emerging market bonds in the seven weeks ending August 17, underscoring just how hungry investors have become for higher yields in riskier assets.
Initial guidance on the SBC bond was set at 10-year Treasuries plus 90 basis points, before tightening sharply to 67.5bp over the benchmark. Final pricing of the August 2026 bond was priced at 99.011 on a coupon of 2.125% to yield 2.236%, according to a term sheet seen by FinanceAsia.
Given SBC's quasi-government status, the closest comparables were Export-Import Bank of Korea's outstanding May 2026 2.625% and Korea Development Bank's January 2026 3% notes, both of them which traded at 10-year Treasuries plus 62bp.
Based on a sales note from a non-syndicate bank, the fair value of the SBC deal was likely at Treasuries plus 60bp, given strong underlying demand from onshore Korean investors that are likely to view it as an equivalent quasi-sovereign credit.
The joint bookrunners on the transaction were BNP Paribas, Citi, Credit Suisse, and Nomura.
