Posco set for first issue of 2001

South Korea''s Posco to issue corporate bond on January 15.

Posco, otherwise known as the Pohang Iron and Steel Company, will launch its first corporate bond of the year on 15 January with a W300 billion ($237.7 million) deal via co-leads Daeshin Securities, Hyundai Securities and Samsung Securities. 

The South Korean firm, the second largest steel manufacturer in the world, claims that the annual coupon of 6.99% on offer for the three-year bonds will set a precedent as the lowest to be issued by a private Korean company.

By that definition, the interest rate on this issue is higher than was available on a transaction launched in 1999 by Kepco - the Korean Electric Power Corporation - where the coupon was 6.70%. However, Kepco is a government-owned company and so has a consequently higher credit rating.

Despite the relatively low coupon offered by Posco, an official at Samsung said there would be no problem with investor appetite. In fact, the official commented that the initial offering had been targeted at W200 billion but had been increased to W300 billion because of high demand. He believed that reflected the reputation and creditworthiness of the company with local investors, which for this deal are mainly drawn from pension funds and commercial banks.

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