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Debt issues

Naver issues $500 million in first foreign debt amid strong demand

Mar 23, 2021 (Gmt+09:00)

Naver issues 0 million in first foreign debt amid strong demand

South Korea’s top online portal Naver Corp. has successfully issued its first foreign currency bonds worth $500 million amid strong demand as investors welcomed its solid financial status and promising growth outlook.

According to the investment banking industry on Mar. 23, Naver issued five-year dollar-denominated sustainability bonds with a yield of 1.54% per annum, 68 basis points above the yield on US treasuries with the same maturity, a reference rate.

Naver managed to sell the bonds at a yield 22 basis points lower than its proposed interest rate as the new debt was more than six times oversubscribed, drawing bids worth $3.3 billion from some 130 institutional investors during the bookbuilding process on Mar. 22.

The latest debt was rated A-, the same investment grade as Korea’s telecom giant KT Corp.’s debenture.

Morgan Stanley and Mirae Asset Daewoo Securities Co. managed the foreign bond sale.

Sustainability bonds are bonds where the proceeds will be exclusively applied to finance or refinance a combination of both green and social projects.

The global bond issue follows its domestic bond sale late last month in which it raised 700 billion won ($620 million), almost double its planned amount. The Korean bond was oversubscribed by more than three times.

INVESTMENT IN ENTERTAINMENT PLATFORMS

In January, Naver said it planned to raise as much as 1.26 trillion won in domestic and overseas bond markets to finance its aggressive investment in entertainment platforms.

The web portal has been sprawling into shopping, web content and fintech businesses through acquisitions.

In January, Naver announced the acquisition of Wattpad, the world's largest web novel platform based in Toronto, for 653.2 billion won, as well as the 412 billion won purchase of a 49% stake in BeNX, a unit of Big Hit Entertainment Co., the label behind global boy band BTS. BeNX manages the K-pop online fan community platform Weverse.

More recently, Naver and Korea’s retail giant Shinsegae Group last week agreed to a 250 billion won ($221 million) share swap to strengthen their foothold in the increasingly competitive e-commerce market.

Naver issues 0 million in first foreign debt amid strong demand

SOUND FINANCIAL STATUS

Analysts said Naver’s debt issue was well accepted by investors due to its solid earnings, sound debt ratios and rosy growth prospects.

The company posted a record 2020 operating profit of 1.22 billion won with all-time high revenue of 5.3 trillion won on the back of the widespread non-contact trend amid the COVID-19 pandemic.

The number of daily average users of Naver’s search engine is hovering around 30 million, almost 60% of the Korean population.

The company has also maintained sound financials for years, with its debt ratio standing at 106% as of end-2020.

“Naver’s successful global bond sale will provide a benchmark for other tech companies to follow,” said an investment banking official.

Write to Jin-Seong Kim at jskim1028@hankyung.com

In-Soo Nam edited this article.

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