Korean commercial lender Hana Bank early this morning priced a $500 million five-and-a-half-year bond, revisiting the market again after having earlier postponed its deal.
The initial guidance was released yesterday morning in the area of Treasuries plus 210bp. By evening, this was tightened to Treasuries plus 205bp plus or minus 2bp, with the bonds eventually printing at Treasuries plus 205bp to yield 4.115%.
The coupon was fixed at 4% and the notes were reoffered at 99.439. The deal gathered an order book of $1.4 billion from more than 116 accounts.
The Korean lender had been in the market with its dollar bond before Easter and went out with a whisper at low 200bp over US Treasuries. However, when market conditions turned volatile last week, it decided to postpone the deal with the possibility of returning after the Easter break.
"When Hana Bank was last in the market, it was hit by S&P's downgrade on the US, so they decided to wait for markets to stabilise," said one person familiar with the deal. "Hana is a well-known name in the market, so it was just a question of pricing," he added.
Barclays Capital, Citi, HSBC and Standard Chartered were joint bookrunners.
The bulk of the deal went to Asia (59%), followed by the US (34%) and Europe (7%). By investor type, funds bought 61%, banks 17%, government institutions 13%, retail 6% and others 3%.
The key comparable for Hana Bank was Shinhan Bank's 2016s, which were trading at a z-spread of 165bp. The new Hana Bank bonds, which mature on November 3, 2016, came at a z-spread of 167bp, so there was a new issue premium of about 2bp to 3bp. The outstanding Hana Bank 2015s were trading at Treasuries plus 158bp/168bp yesterday.
Hana Bank is rated A+ stable and A- stable by S&P and Fitch.
There is expected to be further supply from Korean issuers in coming weeks, which could affect the bond's performance in secondary markets. According to Nomura analyst William Mak, Korea Finance Corp is looking to issue senior dollar bonds in May and there will be a supply overhang for the Korean banking sector.
"We reiterate our underweight recommendation on the sector as a whole, given asset quality headwinds from project finance loans, relatively tight valuations (particularly compared to Indian bank peers) and the near-term supply overhang," said Mak in his research note.