Lotte goes shopping for debt

HSBC secures its first domestic bond mandate in Korea, as Lotte Shopping, returns to the debt markets with a W180 billion deal.
Lotte Shopping, Korea's largest department store chain with around a 30% market share, has issued its second bond deal of the year. The company mandated HSBC and Meritz Securities as joint lead managers with Daewoo Securities, Hana Securities, KITC Securities and Tong Yang making up the rest of the syndication group.

Lotte will use proceeds from the W180 billion ($140 million) issue to increase its working capital and to refinance some of its existing debts. The company, which has already raised around W1.245 trillion from the local debt markets, has W295 billion of bonds maturing in the next year.

The latest deal, rated AA-minus by local agencies, has a maturity of three years and carries a fixed-rate coupon of 6%, a spread of 90 to 95bp over three year treasury bonds. The issue price will be set on July 1.

According to an official at one of the leads, the issue price will be some way below par in order to provide investors with a real yield of between 6.8% and 6.9%.

That would bring the transaction more into line with Lotte's last offering -- W300 billion of three-year bonds issued in January this year. These notes carry a nominal coupon of 7%, but a current pricing level of 101.3343 results in an actual yield of 6.91%.


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