Goldman readies deal for Korea Water

The state-run utility looks to establish a new five-year curve.
Goldman Sachs has released guidance for a new $150 million five-year FRN for Korea Water Resources (Korwat). On Tuesday, the American investment bank announced that it would seek to price the deal in the region of 27bp to 30bp over three-month dollar Libor. The lead expects to price the deal either today or Thursday.

The deal was announced last week and roadshows kicked off on Monday taking in both Singapore and Hong Kong.

With the A2/A rated groupÆs continued support from the South Korean Government as well as its fundamental importance in maintaining the national waterworks infrastructure, the parties involved will look to price the deal as closely as possible to other national comparables, such as Kexim and KDB, which have long provided KoreaÆs main pricing benchmarks, and Korea Highway.

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 now being quoted around the Libor plus low 20s. Additionally Kexim has a 2016 deal that is trading at a bid/offer of Libor plus 27bp/30bp.

Bankers also quote a KDB 2012 as a viable comparable, which is trading at a bid/offer of Libor plus 27bp/23bp.

Korea Highway has four existing dollarûdenominated deals in the market û a 2013, a 2014, a 2015 and a 2016. Respectively, these deals were trading at 31bp over Libor; 33bp over Libor; 34bp over Libor and 40bp over Euro Libor.

Also of note, Korwat has a 2014 deal currently in the market. That deal is trading at around 90bp over Treasuries

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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