Hana F&I attracted orders worth five times its target in its second corporate bond demand forecast this year. Despite its non-prime credit rating (A+), the strong demand is attributed to its stable position in the non-performing loan (NPL) market.
According to the investment banking (IB) industry on the 27th, Hana F&I launched a demand forecast targeting institutional corporate bond investors that day to raise 150 billion won. Institutions bet 687 billion won, about five times the target. Specifically, the 1.5-year tranche drew 90 billion won against a 30 billion won target, the 2-year tranche drew 92 billion won against a 70 billion won target, and the 3-year tranche drew 505 billion won against a 50 billion won target.
The corporate bond rate is expected to be set below the level traded in the market. Ahead of the demand forecast, Hana F&I set its target rate band by adding minus 30 to 30 basis points (1bp=0.01 percentage point) to its individual private bond valuation rate (a company's unique rate set by private bond valuation firms). The demand forecast results showed the 1.5-year and 2-year tranches were filled at minus 1bp against the valuation rate, and the 3-year tranche at minus 12bp.
Korea's three credit rating agencies rate Hana F&I's credit at "A+, stable." Although it falls under the non-prime category in the credit rating classification system, its steady performance in the NPL market made securing demand itself not difficult, observers said. Hana F&I posted net profit of about 10.1 billion won on a consolidated basis in the first quarter of this year.
Hana F&I has set a policy to use the funds raised from this corporate bond issuance for debt repayment. The funds are intended to refinance 70 billion won in commercial paper (CP) and 30 billion won in electronic short-term bonds maturing in August and September this year. Since it has left open an increase limit of up to 300 billion won depending on the demand forecast results, the possibility of expanding the funding scale remains. Meanwhile, Korea Investment & Securities, NH Investment & Securities, KB Securities, and Shinhan Securities joined as joint lead managers for this corporate bond issuance.
