Triple-A rated SK Telecom, KT tap 10-year bond market

South Korean companies with top-notch credit ratings such as SK Telecom Co. and KT Corp. are returning to the long-term bond market amid growing interest in longer-dated, higher-yielding bonds before the arrival of widely expected interest rate cuts next year.

KT, the country’s largest telecom service provider, saw 200 billion won ($142 million) in its new bonds nearly six times oversubscribed in book building on Monday, drawing 1.16 trillion won in demand, according to investment banking sources.

The new bonds, to be issued on Dec. 2, comprise 100 billion won in three-year debt; 60 billion won in five-year debt; and 40 billion won with a 10-year duration.

The bonds' terms have not yet been fixed. Buoyed by the strong demand, KT is considering increasing its debt issuance to 300 billion won.

KB Securities Co., NH Investment & Securities Co, Korea Investment & Securities Co. and SK Securities Co. were its underwriters.

SK Telecom, the No. 1 mobile carrier in South Korea, will book build 150 billion won for its new bond issuance with three, five and 10-year maturities on Dec. 3. It is making a comeback to the domestic bond market 10 months after its previous issuance in February.  

The two telecom service providers are among a handful of Korean companies with triple-A ratings. Excluding financial services firms, the other Korean companies with such top-notch credit ratings are tobacco maker KT&G Corp., Hyundai Motor Co. and Kia Corp.

The debt sales followed their local peers’ successful long-term bond issuances this year.

Last month, S-Oil Corp., a double-A rated refiner, sold its first 10-year bonds in several years. It raised 300 billion won in new bonds, which were six times oversubscribed.

The issuance comprised 150 billion won, 80 billion won and 70 billion won with three, five and 10-year maturities, respectively. 

"Telecom companies are looking to diversity their bond durations as institutional investors are chasing longer-duration debts," said a corporate finance team official at a leading Korean brokerage company.

Write to Hyun-Ju Jang at blacksea@hankyung.com
 

Yeonhee Kim edited this article.