Rumoured to be no less than $500 million (and possibly considerably larger), pricing for the 144a Reg-S five-year transaction was being whispered at 120bp over Treasuries yesterday (55bp over Libor). It will be the Korean bankÆs first and only public dollar-denominated benchmark deal this year, say sources.
The leads have reportedly already approached investors, which has led to some criticism from rival bankers. ôTalking to investors prior to a formal announcement is called a below-the-radar execution, which is a very defensive strategy for such a strong credit, even in this market,ö says one syndicate banker, referring to the absence of Bloomberg messages, or figures on his screen concerning the deal. ôIt implies a lack of confidence, which isnÆt the kind of message you want to be sending to the market right now. Plus you creates noise around a deal rather than controlling the flow of information, which doesn't work in your favour either.ö
But one source on the buy-side defends the move, saying: ôOnly one big deal has come out of Asia (ICICI). The leads are just getting an idea of demand before they come out with a formal announcement. ItÆs not about credit these days, or the quality of the name. The issue is the overall market dynamics, where the appetite for deals is unpredictable.ö
Another banker agrees, saying this is simply a function of what has been experienced in the last two months. ôWe are in a buyers' market, so even with a strong name there will be spread sensitivity from an issuerÆs perspective. If you just hit the screens, you are allowing the investors to direct the price. By engaging them and working with them in a pre-announcement phase, you are able to manage expectations on both sides much more effectively.ö
Meanwhile, another observes: ôIn the US, the new issue premium has come back and, in Europe, weÆve seen a 20bp rally in upper tier-two bank names. Nothing has happened in Asia yet, but it might. ItÆs no good putting numbers on the screen at this stage, because this might be too wide, and the issuer will end up paying more that it should.ö
Kexim's last foray into the international bond market was through a Ç750 million via Citigroup, Deutsche Bank, UBS, Merrill Lynch and Depfa Bank in January 2007.
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