KDIC bond issue big hit with investors
A US$500 million exchangeable bond issue by Korea Deposit Insurance Corp (KDIC) was eight times oversubscribed yesterday.
The four-year issue was popular, pricing in a range of 145 to 150 basis points above United States treasuries, said Ben Yuen Cheuk-bun, an associate director of fixed income at CMG First State Investments.
This was attractive compared with the 120-basis-point spread on the two-year notes of Korea Development Bank, which were also considered a quasi-sovereign issue, he said.
Holders are being offered the option of exchanging the bond for stocks in one of two South Korean banks majority owned by the government.
There was also a two-year option to put the bond back to the issuer, Mr Yuen said.
The JP Morgan Asia Credit Index is up 12 per cent for this year to date, attracting investors to switch from equities to bonds.
'Recent supply coming in has not [affected] spreads,' said Amy Li, a regional bond analyst for JP Morgan.
Meanwhile, KorAm Bank yesterday said it had priced US$160 million of upper-tier II subordinated notes at 284 basis points above five-year US treasuries.
They carried a 6.95 per cent coupon and were issued at par value, Salomon Smith Barney said.
