Joint lead managers Barclays Capital and HSBC took Kookmin Bank's 4.625% December 2007 bond up to $500 million yesterday (Tuesday). The re-opening priced exactly where the market had been anticipating and came flat to the secondary market bid of its existing paper.
The deal was re-opened at 104.72% to yield 3.478% or 130bp over Treasuries. This was the tight end of 130bp to 135bp guidance released to the market Monday lunchtime in Asia. Over the course of the one-day bookbuild, the bid side of Kookmin's existing deal was said to have fluctuated between 133bp to 130bp, meaning that some accounts were placing orders slightly through the bid.
With a total order book just shy of $300 million, pricing could be tightened down to the tight end. By the close of the book in Asia on Tuesday, 30 accounts were said to have participated with little overlap between the current deal and original deal led by ABN Amro and HSBC last December.
By geography, the book was said to have a rough split of 85% Asia, 15% Europe. Asian demand further split, 45% Hong Kong, 30% Singapore, 24% Korea and 1% Japan. By investor type, banks predominated on roughly 60%, with fund managers on 20%, pension funds 10% and the remaining 10% split between insurance companies and private banks.
The nearest comparable was the Industrial Bank of Korea (IBK), whose recent 2008 bond was trading at 134bp bid and its 2007 bond around 145bp bid. When Kookmin launched its first ever fixed rate bond in December, it priced at a 3bp premium to IBK.
Launch this time round could have been more problematic, however, following S&P's decision to cut the outlook on Kookmin's BBB+ rating from stable to negative at the beginning of this month because of the troubles at its credit card division. Thus while IBK and Kookmin still share the same A3/BBB+ ratings, there is now a two notch differential in outlook on the S&P side.
Unlike most recent re-openings, Barclays and HSBC are said to have completed the deal on a bookbuilt basis with no underwriting commitment. Just like all other Asian bond issues, however, fees have crept even further down, with the deal completed for just 18bp.