Korea National Oil Corp (KNOC) tapped the Swiss franc market on Wednesday evening with a Sfr240 million ($252 million) deal.
It was the first international public deal from Asia since market volatility hit in mid-June and, as the US dollar bond market continues to stall, more borrowers could turn to niche currencies for funding.
The Swiss franc market offered KNOC liquidity as well as competitive pricing compared to the dollar market, according a source familiar with the deal. Asia’s dollar bond markets shut down in June after a record-breaking first five months.
“The dollar market is not there, and the Sing dollar and dim sum market have been quiet,” says the source.
The long five-year bond priced at mid-swaps plus 88bp, which worked out to be about 140bp over Libor after swapping to US dollars. The outstanding KNOC 2018s traded at Treasuries plus 180bp, which worked out to be Libor plus 155bp. Assuming the company swapped the Swiss francs to US dollars, the deal offered competitive pricing.
The deal was upsized from Sfr200 million to Sfr240 million. KNOC is 100%-owned by the Korean government and is rated A1/A+. The bonds have a maturity of five years and 120 days. The coupon was fixed at 1.625% and the bonds reoffered at 99.771 to yield 1.671%.