The reg-S only deal, a drawdown on Korea Highway's EMTN programme, was announced on Monday with a guidance of mid-swaps plus 42bp on a maximum deal size of Ç400 million. When the A3/A rated deal closed on Wednesday night, a total of three days later, without a deal-oriented roadshow, it came in line with guidance. Final pricing came at 99.555% on a coupon of 4.375% to yield at 4.431%, equivalent to 42bp over mid-swaps.
In light of the volatility that the Thai coup introduced into the Asian market, pricing flat to guidance and at the maximum size is a solid result for the leads. Throughout the day, most Asian corporate G3 deals had pushed out as wide as 25bp to 30bp, however those levels had corrected somewhat to 10bp to 15bp by the end of trading.
Indeed, even the Korean sovereignÆs CDS had pushed out from an opening level of 21bp to 25bp. At the time of Korea Highway's pricing they were quoted at 23bp.
The deal closed with a Ç650 million order book with a total of 40 investors taking part. European investors bought the largest percentage of the deal taking 49% with the remainder of the notes sold into Korea (6%) and the rest of Asia (45%).
By investor type, banks bought 66%, funds 16%, insurance 17% and retail accounted for the remaining 1%.
In terms of comparables, Korea Highway has three existing dollarûdenominated deals in the market û a 2013, a 2014 and a 2015. Respectively, these deals were trading at 88bp over Treasuries or 37bp over Libor; 92bp over Treasuries or 38bp over Libor; and 92bp over Treasuries or 38bp over Libor.
However, these levels have also been pushed out following the coup, and are more likely to be 1bp to 2bp through those levels.
As a government-owned corporation under the Korea Highway Corporation Act, the company enjoys solid support because of its status as a wholly owned government entity eligible for official funding and its policy-implementation role, as well as the recognised importance of the national expressway network.
The government controls its holdings of Korea Highway through the Ministry of Construction and Transportation and Ministry of Finance and Economy.