Rare bond by Samsung Electronics

Korean electronics giant completes reverse enquiry trade.

One of, if the not the best known company in Asia, made one of its infrequent visits to the international bond markets on Friday with a $100 million FRN via Citigroup and HSBC.

The A3/A- sovereign rated credit priced a three-year deal at par with a coupon of 30bp over Libor. Only four investors participated in the trade, which was built around reverse enquiry demand. One of the investors is believed to have been HSBC itself.

Timing of the deal was good despite the fact that the stock price has not performed well over the last two quarters and the industry has entered a cyclical downturn. Where bond spreads are concerned, however, high grade Korean credits have tightened in about 15 to 20bp over the past two weeks.

In terms of benchmarks, there is very little paper outstanding at the short-end of the curve given that most borrowers would use a loan structure for this kind of maturity. In the bond markets, there are a couple of policy bank deals and one November 2006 deal by Posco, which is bid at 21bp over on a bid price of 107%.

Samsung recently released third quarter results, which were below expectations. EBITDA came in at Won2.74 trillion ($2.5 billion). This represented a 26.5% decline on the previous quarter and the biggest drop since the last severe downturn in 2001 when the internet bubble burst.

The majority of EBITDA was generated by semiconductors, which accounted for Won2.23 trillion.

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