KT receives record-high corporate bond bids of $2.3 billion

KT Corp., which boasts the nation's highest credit rating at the stable “AAA,” reached a whopping 2.89 trillion won ($2.27 billion) in corporate bonds bids in the book-building process.

The figure is the highest since the South Korean telecommunications company began to take estimates of demand for its corporate bonds in 2012. 

The lead investors for KT's issuance are KB Securities, NH Investment and Securities, Korea Investment and Securities, Shinhan Investment and Securities, and Samsung Securities Co.

Experts say the rising demand comes from the increased interest in savings at the beginning of the year and expectations that interest rates will jump even further. 

Initially, KT sought to issue two-, three- and five-year bonds worth a combined 150 billion won and was considering doubling the amount to 300 billion won.

In detail, there were 40 billion won worth of corporate bonds with two-year expiry, 70 billion won worth of corporate bonds with three-year expiry, and another 40 billion won worth of corporate bonds with five-year expiry. 

But a total of 2.89 trillion won worth of orders flocked in based on detailed demand analysis. 

There were 485 billion won worth of corporate bonds with two-year expiry, 1.55 trillion won worth of corporate bonds with three-year expiry, and 845 billion won worth of corporate bonds with five-year expiry. 

Turning to retail giant E-Mart Inc., which has a stable “AA” rating, received 1.18 trillion won in corporate bond bids in its book-building process.

E-mart received bids of two- and three-year bonds worth 370 billion won and 150 billion won respectively.

The two companies are the frontrunners in the new year's corporate bond demand forecasts.

Thanks to institutional investors' bullish participation, KT could also lower the issuance interest rate. 

Several large-cap companies are proactively issuing corporate bonds, including POSCO Holdings Inc. with a rating of "AA+," LG Uplus Corp. with "AA" and LG Chem Ltd. with "AA+" this month.

Industry insiders estimate the combined corporate bond issuance in this month alone to exceed 5 trillion won, fueling concerns about oversupply. 

Write to Hyun-Ju Jang at blacksea@hankyung.com
Jee Abbey Lee edited this article.