Apart from these government-owned and quasi-sovereign organisations, private sector banks like Woori and Kookmin are also lining up to issue debt.
One DCM banker says that by choosing to come to market earlier, rather than waiting for the market to pick up, these banks and corporates are trying to avoid a fight for investor attention. He says as Korean regulators make it easier for offshore bond issues, domestic companies and banks are likely to go for jumbo issues of $1 billion or above in whatever currency they choose to issue.
Another banker, however, cautions that challenging market conditions may force Korean issuers to cap their deals at $300 million to $400 million.
Meanwhile, an investor who has regularly invested in Korean debt, says the trying market conditions may also require issuers to be more generous in terms of pricing to catch the attention of institutional investors. ôKorean companies and banks need to come to the market for refinancing. With the market still soft they will have to be competitive in pricing,ö the investor says.
A second investor, who is also heavily invested in Korean paper, says the bond market is soft and will remain so in the fourth quarter. ôThere are still a lot of uncertainties in the market which have not been cleared. I am looking at the second quarter of 2009 for signs of improvements,ö he says.
Unfavourable market conditions forced Kexim to shelve plans to sell Samurai bonds worth Ñ50 billion ($485 million) in April. The policy bank released a statement at the time justifying its decision to scrap the issue: ôIt is unnecessary to issue bonds unless they are under advantageous conditions, so we will indefinitely postpone issuance of Samurai bonds.ö
Previously, Kexim had sold bonds denominated in non-G3 currencies like the Malaysian ringgit and the Mexican peso to diversify its funding base. The main reason for this mix of currencies is because of the large number of deals from Korea. This year alone has seen international bond issues from Korea Midland Power, Korea Southern Power, Hyundai Capital, Kexim, GS Caltex, Woori Bank and SK Energy.