Mirae Asset Securities raises $600 mn in foreign bonds

Mirae Asset Securities Co. on Monday issued $600 million worth of foreign currency bonds, marking the first foreign bond sale by a South Korean brokerage firm this year, according to investment banking sources.

The bonds, comprised of notes with three- and five-year maturities, were more than 10 times oversubscribed, attracting nearly $7 billion in bids.

They were sold at lower rates than their initial price guidance, easing market concerns about Korean brokerage companies’ exposure to construction companies struggling with liquidity shortages.

Domestic securities firms also face regulatory scrutiny over possible misselling practices of risky products such as equity-linked securities tied to the performance of the Hang Seng China Enterprises Index (HSCEI).

Korean financial authorities have launched on-site inspections into derivative product sellers -- banks and brokerage firms -- after they incurred heavy losses and wiped out almost all the savings of some retirees due to a plunge in their underlying assets.

Mirae's three-year bonds were sold at 222 basis points (bps) higher than their corresponding US Treasury yield, with their five-year notes issued at 200 bps above. They were rated triple B.

Mirae Asset's initially proposed spread was 235 bps and 260 bps for three- and five-year bonds, respectively, with yields in line with US Treasuries of the same maturities.

Industry sources said Korean bonds attracted global investors keen to fill the void left by Chinese issuers, which curtailed bond sales, amid the prospect of US interest rate cuts this year.

Citigroup Global Markets, Credit Agricole, HSBC and Mirae Asset’s Singapore subsidiary underwrote the issuance.

Mirae Asset debuted on the dollar bond market in 2018 and has since raised around $500 million in foreign bonds annually, except in 2022.

South Korean companies' foreign bond offerings in January 2024
Export-Import Bank of Korea	$2 billion
SK Hynix	$1.5 billion
Hanwha Total Energies Petrochemical	$400 million
POSCO Holdings	$500 million
Woori Bank	$700 million

Korea Electric Power Corp, Shinhan Bank, Shinhan Card and Hyundai Card are preparing to issue foreign currency bonds in the coming months.

Write to Seok-Cheol Choi at dolsoi@hankyung.com
 

Yeonhee Kim edited this article.