NH Investment & Securities (005940.KS) secured 2.1 trillion won in demand in its second corporate bond book-building of the year. The company's recent decision to carry out a 400 billion won rights offering is seen as having driven investor sentiment, amid expectations for improved competitiveness in its comprehensive investment account (IMA) business.
According to investment banking (IB) industry sources Friday, NH Investment & Securities conducted book-building targeting institutional bond investors that day to raise 300 billion won. Institutions placed a total of 2.1 trillion won in orders. Specifically, demand reached 840 billion won against a 100 billion won offering of two-year notes, 880 billion won against a 150 billion won offering of three-year notes, and 380 billion won against a 50 billion won offering of five-year notes.
Interest rates showed clear differences by maturity. Ahead of the book-building, NH Investment & Securities set its target yield band by adding minus 30 to plus 30 basis points (1bp=0.01 percentage point) to its individual private valuation rate (a company's unique rate set by private bond valuation firms). The book-building results showed the two-year notes filled the offering amount at a level 5bp below the private valuation rate for the same maturity, while the three-year spread formed at the same level as the private valuation rate. The five-year notes are expected to be set at a level 2bp above the private valuation rate.
With a strong "AA+, stable" credit rating and an expected earnings improvement this year, more orders flowed in than the amount secured during the January book-building (1.79 trillion won), according to analysts. NH Investment & Securities posted consolidated net profit of 475.7 billion won in the first quarter, setting a record high on a quarterly basis. In addition, the company's June 2 resolution to carry out a 400 billion won rights offering to NongHyup Financial Group played a part in attracting quality investors, amid expectations for the future competitiveness of its IMA business.
NH Investment & Securities has set a policy of using the funds raised through this public bond issuance for debt repayment. Specifically, the funds will be used to refinance commercial paper (CP) maturing within the month. With more than 2 trillion won in institutional orders received, the company is in a position to issue up to the maximum of its previously presented increase limit (600 billion won). Meanwhile, Shinhan Securities and SK Securities served as lead managers for this public bond issuance.
