Hana Bank prices successful benchmark bond

The Korean bank prices the largest Reg-S-only bank capital trade out of Asia.
Joint bookrunners Credit Suisse, Barclays Capital and Deutsche Bank led Hana Bank, the South Korean banking arm of Hana Financial Group, through the largest Reg-S-only bank capital trade out of Asia, as well as the tightest new issue spread for a Korean bank sub-debt.

HanaÆs $500 million 10-year non-call five lower tier-2 bond last night attracted $960 million of demand, closing at the tight end of revised pricing guidance (43bp to 45bp over mid-swaps) at 43bp over mid-swaps. The deal included a combination of small and big tickets, with the largest order of the book coming in at $120 million and the smallest at $300,000.

For comparison, Hana BankÆs 2016 lower tier-2 issue is currently trading at 42bp over Libor. With an asset swap level of 40.5bp over Libor, this deal priced 1.5bp through the outstanding curve, and significantly through the implied curve.

The issue, rated BBB+/Baa1, was only two times oversubscribed however, but the quality of the book was high nonetheless. ôSince the market has focused on high-yield issues lately, the breadth of investors hasnÆt been as big. However, the fact that Hana is not a frequent issuer helped get people on board.ö The deal includes a 5.375% semi-annual coupon to call, with a step-up of 188.8bp over the then prevailing five-year treasury if not called.

Hana allocated 68% of the funds to Asia and 32% to Europe, with 51% sold to banks, 45% to asset managers and 4% to retail and insurance.

The issue is registered off Hana BankÆs global medium-term note programme, which allows for the issuance of various classes of securities, including senior notes and lower tier-2/upper tier-2 subordinated notes.

Hana Bank is KoreaÆs fourth largest bank. According to MoodyÆs, the rating reflects its systemically important position to Korea and its good franchise in retail and SME lending. Hana has the broadest business bank in Korea, and is one of the most efficiently managed. ôThe ratings are further based on the bankÆs traditionally commercial-minded management, moderate financial fundamentals û including above-average operating efficiency û and the opportunities it has to obtain technical assistance from strategic shareholder, Allianz of Germany,ö says Beatrice Woo, MoodyÆs senior credit officer in Singapore.
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