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Corporate bonds

KT to raise $300 mn in dollar bond at record-low rates

More than $2 billion worth of orders received

By Jul 15, 2021 (Gmt+09:00)

(Source: Getty Images Bank)
(Source: Getty Images Bank)

KT Corp., a South Korea's telecom company, is set to raise $300 million in a dollar corporate bond at the lowest interest rate for its foreign currency debts on healthy demand.

Lotte Global Logistics Co. also issued an environmental, social and governance (ESG) bond at a lower yield than a market interest rate.

KT decided to sell the 5-1/2-year-bond on July 21 at 1.375% per annum, 0.675 percentage point higher than the five-year US Treasury yield, according to the investment banking (IB) industry on July 15. The spread was narrower than KT’s initial guidance of plus 1 percentage point and the lowest borrowing cost for foreign currency bonds it issued. It received more than $2 billion worth of orders in the bookbuilding.

Citigroup Global Markets, Credit Agricole and BNP Paribas underwrote the bond issue. Those underwriters launched roadshows to 45 major banks, insurers and asset managers in Hong Kong, Singapore and Europe amid expectations that US Federal Reserve may scale back its massive asset purchase program due to inflation.

The predictions deteriorated conditions for bond sales, but demand for high-quality debts grew as they offer better yields than government bonds with little default risks, according to the IB industry.

Moody’s Investors Service and Standard & Poor's (S&P) rated KT at A2 and A-, respectively, same as KB Kookmin Bank and Shinhan Bank.

Moody’s said KT’s profitability was expected to increase on growing 5G service subscribers with a stable financial structure.

LOTTE GLOBAL LOGISTICS SELL FOREIGN CURRENCY ESG BOND

Meanwhile, Lotte Global Logistics said on July 15 it issued a $30 million foreign currency ESG bond through private placement. It received an ESG certificate from DNV, Norwegian certification company specialized in shipping and transportation.

The company sold the debt at 0.2 percentage point lower than the average interest rate suggested by credit rating agencies.

It will use the proceeds to adopt eco-friendly vehicles and build smart logistics centers.

BNP Paribas and Samsung Securities underwrote the bond issues.

In January, Lotte Global Logistics raised 50 billion won ($43.8 million) in an ESG bond issue denominated in the won at 0.25 percentage point lower than the average interest rate suggested by credit rating agencies as ordered mounted to 151 billion won.

Write to Hyun-il Lee and Geun-Ho Im at hiunreal@hankyung.com

Jongwoo Cheon edited this article.

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