Woori Bank returned to the senior bond markets for the first time since September 2003 on Monday night with a $300 million 144a issue via Barclays and Merrill Lynch.
The five-year deal was priced 99.681% on a coupon of 4.50% to yield 4.572%. This equated to 87.2bp over Treasuries and 47bp over mid swaps. Fees were 22.5bp.
The deal appeared aggressive relative to the Baa1/BBB rated bank's outstanding curve. Its September 2008 bond was trading only 1bp tighter than the new deal on a mid swaps basis, while its October 2007 bond was trading 6bp tighter than its 2008.
Specialists say the bank believed it could get away with tight pricing levels because investors are looking for yield pick-up over the policy banks, which have now tightened to historically low levels. The three quasi sovereigns - KDB, Kexim and IBK, are currently trading in the low 30bp range over Libor for their 2009 paper and in the high teens for their 2007 paper.
As one specialist comments, "There has been a lot of buying at the mid-point of the curve and the Korean policy banks have become very technical, making it hard to get paper."
Woori's order book closed at the $600 million, with participation by 40 accounts. By geography, 54% went to the US, 28% to Asia and 18% to Europe. Only a couple of accounts came from Korea as the dollar/won basis swap is currently very narrow.
By investor type, banks took 47%, fund managers 37%, insurance companies 12% and other 4%.
One notable aspect of the transaction was its 144a registration, which is believed to be a first for a Korean commercial bank. The deal was launched off the group's global MTN programme and specialists believe this enabled it to target a wider investor base.