Joint leads HSBC, JPMorgan and Merrill Lynch will begin roadshows later this week for Korea Development Bank's dollar denominated benchmark bond. The deal will be shopped to investors at a showcase in New York on Wednesday.
The leads have handled the transaction with inherent care since being awarded the mandate two weeks ago. As record oil prices rock global markets in the wake of Hurricane Katrina and with the uncertainty surrounding the Indonesian economy, the A3/A- quasi-sovereign has taken a cautious posture in finalizing terms and timing of its benchmark deal.
The policy bank is watching to see how the markets move at the beginning of the week before making any final decision on when to formally launch the deal. With the volatility in US equity markets and a slight sell-off among treasuries, KDB is flexible on the timing of when to bring the deal into the marketplace and is rather content to launch the deal on its own timeframe.
As a regular borrower from the overseas market and the US market in particular, KDB has the ability to launch the deal in a very short time frame and will look to release finalized terms either Monday afternoon or Tuesday.
With the Libor curve relatively flat, and a high level of liquidity in five-year space, most observers are expecting a five-year $1 billion deal. Speculative price talk among bankers for a proposed five-year deal has been around 32bp over Libor, a level that seems fair relative to the current secondary market trading level of Kexim's most recent five-year offering which was launched in March.
KDB has recently been trading 1bp to 2bp wider that Kexim and its March 2010 was quoted on Friday at 30bp over Libor. Historically, the development bank has always maintained very aggressive borrowing targets and observers expect to see little difference with this deal.