Asian dollar bond issuance this year has so far been dominated by Hong Kong issuers but Korean companies are expected to join the crowd soon, as borrowers look to lock in funding at low rates. Korea Development Bank and Export-Import Bank of Korea (Kexim) have both already tapped the market.
Quasi-sovereign oil company Korea National Oil Corp (KNOC) sent out requests for proposals on Monday for an upcoming dollar bond and submissions are due this week, according to a source. The company is said to be eyeing a $500 million to $1 billion deal and is expected to issue either a five- or 10-year bond. Current expectations are that it will likely be a five-year bond.
KNOC has been tapping the debt markets regularly. In October last year it priced a $1 billion five-year senior bond via Barclays Capital, Bank of America Merrill Lynch, HSBC, KDB and Royal Bank of Scotland. And just over a week ago it issued a SFr300 million ($329 million) Swiss franc bond through Barclays Capital, Credit Suisse and UBS.
The company needs dollar funding for its offshore assets. South Korea last week announced plans to increase its self-supply rate of oil and natural gas from 13.7% of its total consumption to 20% by the end of this year.
The conducive market environment is also attracting less frequent issuers. After an absence of close to 15 years, Samsung Electronics plans to revisit the public debt markets with a dollar bond. It has mandated Bank of America Merrill Lynch, Citi, Goldman Sachs, J.P. Morgan and Samsung Securities for the deal. The timing is slated for March.
According to one source, the fact that the company has appointed a line-up of US banks suggests that it will probably target the US investor base. One Hong Kong-based investor said that the company has been meeting with some investors in the region and he expects that it could issue up to $1 billion.
Samsung Electronics is the flagship subsidiary of the Samsung Group. Its semiconductor division is the world’s largest memory chip maker and the company reportedly plans to raise funds to expand capacity at a factory in Texas.
Elsewhere, Hyundai Capital is believed to have mandated Bank of America Merrill Lynch, J.P. Morgan and a number of other banks for a dollar bond that is expected to launch in March or April, while Hyundai Motors is also planning to issue a dollar bond.