KDB launches $1 billion dual-tranche bond

Depfa Bank to joint manage KDB's seven-year euro-denominated FRN.
The Korea Development Bank (KDB) has announced its intention to raise $1 billion though a dual-tranche dollar- and euro-denominated floating-rate note, due to price today or tomorrow. The bank has appointed bookrunners UBS, Merrill Lynch, JPMorgan, and ABN AMRO, as well as joint-lead manager Depfa Bank which was approached to add momentum to the deal. Depfa will provide a lead order in the seven-year euro tranche.

Initial guidance for the global SEC-registered bond (rated A3(+)/A/A+) has been set at 14bp-16bp over dollar Libor, and 24bp-27bp over Euribor. Export-Import Bank of Korea's (Kexim) 10-year eurobond is currently trading at 28bp-29bp over Euribor.

Some market observers speculate that the price may be too aggressive for the market, while others are confident that the flexibility inherent to the dual-tranche structure will allow both notes to be sized according to demand.

Further, large investors from the US are expected to participate, while the euro offering is likely to generate strong demand from Europe. ôEuropean accounts are very familiar with three- and seven-year deals, since many are banks (or related to banks), and are used to this type of trade from the European bank market. They tend to go in bigger size per order, with firmer limits than funds managers or retail accounts. These institutions also have a very clear view of assets they need to hold against their own single-A rating on their balance sheetsö says one source.

The bank is KoreaÆs primary governmental financial institution funding industrial development and raising funds on its behalf in international markets. According to MoodyÆs, the Korean government - which is obliged to maintain the bankÆs solvency - has injected W10.4 trillion ($10 billion) of cash and securities into KDB since 1998 to strengthen the bankÆs capital.
¬ Haymarket Media Limited. All rights reserved.
Share our publication on social media
Share our publication on social media