Joint lead managers Bank of America, Barclays Capital and Goldman Sachs priced a new $300 million five-year FRN for Korea's Kookmin Bank on Tuesday night (November 28). The deal marks Kookmin's first return to the senior bond markets since June 2003 when it tapped its 4.625% December 2007 bond for $200 million.
Initially marketed to investors at the low to mid 30bp range, guidance was revised to the 30bp level during the roadshows as investor interest grew. The A3/A-/A rated deal was priced at par on a coupon of 29bp over three-month Libor, the tightest ever for any Korean commercial bank. Fees were said to be 15bp.
Pricing was also considered relatively aggressive relative to the government policy banks, which are currently trading in the low to mid 20bp range over Libor for their 2010 FRN paper. IBK, for example was trading at 27bp over Libor, KDB at 28bp over, and Kexim at 24bp over.
Specialists say the bank believed it could get away with tight pricing levels because investors are looking for the safety that FRN's provide in a rising interest rate environment. As one specialist comments, "This deal really taps into the momentum the quasi-sovereigns have built up with investors, especially among the usually price sensitive European investor base."
Kookmin's order book closed relatively heavily oversubscribed at the $1.1 billion level, with participation by 54 accounts. By geography, 70% went to Asia and 30% to Europe.
By investor type, banks took 82%, fund and asset managers 13%, corporates 2%, private banks 1% and others 2%. Despite its aggressive pricing, the deal has traded relatively steady in its first day in the secondary markets with a bid offer spread of 29bp-27bp.