Kiwoom Securities (039490.KS) secured 945 billion won in institutional orders in its third corporate bond demand forecast survey this year. Analysts said demand exceeded the offering size thanks to the firm's solid position in the retail market, even as investor sentiment weakened somewhat amid rising market rates.
According to the investment banking (IB) industry on the 13th, Kiwoom Securities conducted the demand forecast survey for institutional bond investors that day to raise 200 billion won. Institutions submitted bids totaling 945 billion won. Specifically, 470 billion won came in for the 70 billion won two-year tranche, and 475 billion won for the 130 billion won three-year tranche.
With the large inflow of demand, the bonds are expected to be issued at rates similar to those traded in the market. Ahead of the survey, Kiwoom Securities set a target rate band by adding minus 30 to plus 30 basis points (1 bp = 0.01 percentage point) to its individual fair market yield (the company's proprietary rate set by private bond rating agencies). As a result of the survey, the two-year tranche filled the offering amount at minus 1 bp, while the three-year tranche did so at the same level as the fair market yield for the same maturity.
With a strong "AA0, stable" credit rating and a solid market position in the retail sector, the firm drew institutional bets, observers said. However, the intensity of orders from institutional investors, who felt cost burdens amid rising market rates and other factors, appeared somewhat weaker. Kiwoom Securities attracted institutional demand of 2.665 trillion won in January this year and 1.22 trillion won in May.
Kiwoom Securities plans to use the funds raised through this public bond issuance for debt repayment. The money will be used to refinance 200 billion won in electronic short-term notes maturing at the end of July this year. As the firm has said it will keep the increase limit open up to a maximum of 400 billion won depending on the survey results, there is talk that it may expand the funding size to match the refinancing amount. Meanwhile, KB Securities and Korea Investment & Securities served as lead managers for this public bond issuance.
