Pusan Bank prices $200 million lower tier-two bond

Pusan Bank demonstrates that the skittish equity markets haven't scared away credit investors.
Pusan Bank yesterday priced a $200 million lower tier-two bond deal, ably demonstrating that credit investors are not too perturbed by the topsy-turvy equity markets.

The first bond deal to close after the market wobble last week, KoreaÆs leading regional lender printed a 10-year trade, callable after five years, that priced at 64 basis points over mid-swaps and which was executed in less than 12 hours to minimise execution risk.

KoreaÆs National Agricultural Cooperative FederationÆs (NACF) $440 million 2016-dated bonds were trading at a bid/offer spread of 40/37 when Pusan Bank announced the deal. By the time Pusan's deal was priced, NACF's bonds had become considerably less liquid and were quoted at 44/37.

According to the leads JPMorgan and UBS, the bank succeeded in raising funds that were 15bp-20bp cheaper than what it could have achieved in the domestic market.

The deal was strongly supported by Korean investors, with 38% of the bonds sold locally. The remainder were sold almost exclusively in Asia, with just 1% going to Europe. By account type, 40% went to asset managers, 52% to banks and 8% to others. Investors placed orders worth $900 million and 42 accounts eventually bought the deal.

Pusan Bank is the leading regional bank in Korea, with its operations principally in Pusan, the second largest city in the country and its largest port. Pusan Bank was established in 1967 to energise the local economy and promote balanced growth in the region. It is listed on the Korea Stock Exchange.
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