The unsubordinated, unsecured notes are rated A-/A3. Size is expected to be in the $200 million area, although it has yet to be finalised.
This will be KT CorpÆs fourth foray in the US dollar space since the crisis. Last July it priced a $400 million 10-year Reg S 144A deal via Goldman Sachs, JPMorgan, Merrill Lynch and UBS. That deal priced at 98.086% on a coupon of 4.875% to yield 5.122%. Equating to 98bp over 10-year US treasuries or 55bp over Libor. Currently that deal is trading at a bid/offer spread of 115bp - 105bp over.
Although guidance has not yet been released, bankers familiar with the credit estimate KT CorpÆs one year curve to be worth around 1.5-2bps.
The proceeds from the sale of the bonds will be used primarily to refinance maturing debt; KT has $150 million of bonds maturing in June.
KT is KoreaÆs primary fixed-line operator, while concurrently enjoying leading market shares in the domestic broadband and a second place ranking in the mobile phone market via its controlling stake in KTF. KTÆs revenue is predominantly derived from its fixed-line business, but has seen those numbers dip in recent years as competition has increased and the general public has become more reliant on wireless services. Consequently, KT has had to diversify its revenue sources, augmenting them with a renewed focus on broadband and mobile phone networks as well as devoting increasing capital to the expansion of its wireless broadband networks (via a domestic technology called Wibro).
According to S&PÆs most recent ratings report, ôKT CorpÆs leverage is expected to remain relatively unchanged because of its high dividend payout ratio of 50% and continuing large capital investments. However despite the intensifying competition, its profitability and cashflow generation are expected to remain robust and stable as it maintains secure, leading market positions among the majority of its business line.ö
The notes will be issued off of KTÆs $2 billion global MTN programme.
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