Lotte Chemical recorded a double-digit over-rate in the demand forecast for a bank-guaranteed corporate bond issuance, while KCC secured orders reaching seven times its target.
According to the investment banking (IB) industry on the 23rd, Lotte Chemical received 310 billion won in valid orders against a total target of 200 billion won in its demand forecast for the bank-guaranteed corporate bonds. The maturity structure (tranche) consisted of a single three-year note.
Because the bonds are guaranteed for payment by four major banks — Kookmin, Shinhan, Hana and Woori — the issuance proceeds based not on Lotte Chemical's existing credit rating of AA- but on the fair-value yield of AAA-grade bank bonds (a company's specific yield set by private bond valuation firms). Adding minus 40 to plus 40 basis points (1bp = 0.01 percentage point) to the AAA-grade bank bond fair-value yield resulted in plus 35bp.
Lotte Chemical plans to use the funds raised from this issuance for debt repayment. The issuance was managed by Kiwoom Securities, KB Securities, NH Investment & Securities, Korea Investment & Securities, Shinhan Securities, Samsung Securities, Hana Securities and Woori Investment & Securities.
KCC, which also held its corporate bond demand forecast the same day, drew 1.385 trillion won in bids against a 200 billion won target. Specifically, 685 billion won was received for the 80 billion won two-year tranche, and 700 billion won for the 120 billion won three-year tranche.
KCC is expected to be able to issue the bonds at a level lower than market rates. Adding minus 30 to plus 30 basis points to the fair-value yield resulted in minus 5bp for the two-year note and minus 4bp for the three-year note.
KCC plans to use the funds raised through this bond issuance to repay short-term bonds and commercial paper (CP). NH Investment & Securities, KB Securities, Korea Investment & Securities, Shinhan Securities, Mirae Asset Securities and Kiwoom Securities participated as lead managers for the issuance.
