KT Corp offers small rare deal

The Korean telecom company issues a $200 million five-year note which prices at the tight end.
KT Corporation, the A-/A3-rated Korean telecom company, yesterday issued a $200 million offshore five-year note via bookrunners Goldman Sachs and Citigroup. The deal priced inside guidance at 5.269%, closing with a coupon of 5.125% at a price of 99.374. This equates to 26bp over mid-swaps, 24.5bp over dollar Libor or 72bp over US Treasuries.

Building a total order book of almost $600 million, the deal was three times oversubscribed. The company allocated accounts to 30 investors in a broad distribution for this transaction. 71% of the bonds sold to Asia - mostly Hong Kong and Singapore - with 29% sold to Europe. KT Corporation sold 60% to banks, 28% to fund and asset managers, 8% to insurance companies and 4% to unspecified investors.

The pricing was competitive compared to KT Corp's secondary trades. The company's existing 2015 issue is trading 34bp over mid-swaps (mid-quote), while its 2016 outstanding bond is trading at 33bp. A well-known, defensive credit, the company's timing helped to achieve a positive outcome by issuing ahead of upcoming Korean supply.

However, some market observers have voiced concerns that the rarity of KT CorporationÆs bond activities will result in it not having a curve if this pattern of issuance continues for the next couple of years. A large issue would provide the market with a proper benchmark level, but this is at odds with the corporationÆs funding needs and its strong cashflow.

The proceeds of the issue will be used to refinance its $200 million bond due in April. KT Corporation is one of the largest telecom operators in Korea providing telecommunications services including local, long distance, and international calling, satellite communication, data transmission and wireless telephone service in South Korea.
¬ Haymarket Media Limited. All rights reserved.
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