On Tuesday, Goldman announced initial guidance in the region of 27bp to 30bp over three-month dollar Libor. When final pricing came on Wednesday, the deal closed at par with a coupon of 27bp over.
The A2/A rated deal was announced last week and took in one-on-one meetings in Singapore and Hong Kong starting on Monday. The lead closed the order book with a total of $250 million in orders from 20 accounts. Geographically, Europe was the biggest buyer taking 29%, followed by Singapore with 22%, Korea with 20%, Japan 18% and Hong Kong 11%. By investor type, banks bought 78%, fund managers 12% and central banks accounted for the remaining 20%.
Investors looked at other Korean corporates that enjoy support from the government, such as Kexim and KDB which have long provided KoreaÆs main pricing benchmarks, Korea National Housing, as well as the sovereign itself.
Kexim, a quasi-sovereign, priced a five-year FRN in September at par with a coupon of three-month Libor plus 22bp. That deal is still being quoted around Libor plus 22bp. Rival quasi-sovereign KDB's 2012 paper is quoted at Libor plus 27bp. While Korea National Housing has a 2010 deal that is trading at 25bp over. Bankers also quoted the Republic of KoreaÆs 2013 paper as a viable comparable. That deal is trading at a bid/offer of 19bp/16bp over Libor. Additionally Korwat has a 2014 deal which is trading at around the 90bp over Treasuries level.
Korwat is tasked with the management and development of water resources under the supervision of the Ministry of Construction and Transportation. As such it enjoys support from the government due to its strategic importance to the national economy. That support comes in the form of ongoing contribution/funding provisions as well as a letter of support from the Ministry of Construction and Transportation.
The company's close relationship with the government is further reflected in the state's 99% level of direct and indirect ownership.
Korwat will utilise the proceeds from the sale of the notes for the construction of certain multi-purpose dams and regional water supply systems and for general corporate purposes.
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