Hana Bank prints $500 million benchmark deal

Korea's Hana Bank printed $500 million of senior unsecured debt early yesterday morning following a bookbuild that lasted about 24 hours. The 5.5-year Reg-S/144A notes pay a fixed-rate coupon of 4.5% and were sold at a re-offer price of 99.836 to yield 4.534%. They were issued under the bank's existing $6 billion global medium-term note programme and will mature on October 30, 2015.

Hana followed the same pricing strategy as other Korean banks such as Shinhan Bank, Woori Bank, Export-Import Bank of Korea, Korea Development Bank and the Industrial Bank of Korea, which have all sold bonds with a 5.5-year maturity this year. The extension from a five-year tenor to 5.5 years allows the issuers to take advantage of the current steepness of the yield curve between five and six years to provide investors with a higher coupon at no extra cost, assuming they (the issuers) swap the cash flows from fixed to floating.

Hana did a non-deal roadshow at the end of March, at around the same time as Woori, but held off on launching a deal as it deemed the market backdrop to be unfavourable at the time.

"Markets were strong on Monday on the back of better economic data from the US and with the Greek sovereign situation continuing to stabilise," said a source, explaining why Hana chose to come to market early this week. In addition to the more stable macroeconomic trends, Asia saw equity markets open stronger and credit spreads in the Korean banking sector tighten.

Initial guidance was sent out late Monday morning at 205bp to 215bp over the equivalent five-year Treasury yield. By the close of the Asian trading session, the guidance had been revised to 200bp, plus/minus 3bp. At the time of the revision it was also confirmed to investors that Hana would be looking to issue a benchmark $500 million deal.

Woori was viewed as one of the key comparable issues and it was expected that Hana would price flat to the Woori curve. At the time of pricing, the Woori 2015 bonds that priced in late March were trading at a yield spread in the low 200bp area. The momentum behind the Woori 2015s helped push Hana to a tight price of 197bp -- through the Woori curve.