Kookmin Bank, Korea's biggest lender, returned to tap the international bond markets on Tuesday following its successful and ground-breaking $1 billion covered bond issue at the beginning of last month.
The bank sold $300 million of three-year, Reg-S bonds at 390bp over mid-swap yields in a rapidly executed deal. The transaction was announced at midday on Tuesday and priced about 10 hours later.
While the size of the deal was relatively small, this was the first Asian bank issue denominated in US dollars in the Reg-S market to be issued without a government guarantee or collateral support -- which may explain the presence of no fewer than five lead managers.
Kookmin, which makes up the biggest part of KB Financial Group, is rated A2 by Moody's Investors Service, and A by both Standard & Poor's and Fitch Ratings.
The bonds mature on June 11, 2012 and were priced at 99.748 to yield 5.968%, which translated into a 447.6bp spread over the benchmark US treasury yield. The coupon, payable semi-annually, was set at 5.875%. The issue will be listed in Singapore.
The total order book was around $2.8 billion and more than 180 accounts participated in the offering, according to a banker close to the deal. Hong Kong accounts bought 34% of the issue, Singapore took 35% and Europe 31%. Fund managers were the biggest buyers with 58%, while private banks bought 25%, commercial banks 12% and others 5%.
"We continue to see very strong liquidity in the credit markets for a wide variety of assets," said a spokesperson at Citi, which was one of the lead managers. "Investors who participated in this transaction did not express concerns for buying a bank issue on an outright basis. Sentiment towards financials continues to improve, in line with global trends."
The other lead managers were Barclays Capital, BNP, HSBC and J.P. Morgan.