SOUTH Korean financial institutions once again demonstrated the strength of their credit as they navigated through the global market uncertainty to raise funds from the international debt capital markets.
Shinhan Bank on April 8 successfully accessed the Formosa bond market for the first time as it priced a five-year floating rate note amounting to US$500 million – the largest ever Formosa bond deal out of Korea.
This was also the first Reg S/144A Formosa bond issuance by a Korean issuer and it re-opened the Formosa bond market for Korean issuers after a break of more than four months since Korea Railroad printed a Reg S US$150 million bond in November 2019.
The Shinhan Bank deal was priced at 170bp over three-month Libor, or at the tight end of the final price range of between 170bp and 175bp, and 40bp inside of the initial guidance of 210bp area. The tighter pricing came on the back of a strong order book, which amounted to US$2.1 billion from 104 accounts.
By geographical distribution, 57% of the bonds were sold in Taiwan, 36% in the rest of Asia, 6% in America and 1% in EMEA. By type of investors, banks accounted for 80% of the allocation; fund managers, insurance companies and pension funds 19%, and private banks and corporates 1%.
Citibank Taiwan, Credit Agricole CIB Taipei branch and HSBC Bank Taiwan acted as the joint lead managers for the transaction.
The Shinhan Bank deal came following another bond offering this week from Korea Development Bank, which priced on April 7 a floating rate note amounting to US$500 million for three years. The Korean policy bank was able to upsize the deal amount from the original target of US$300 million after garnering demand of over US$2.3 billion from 96 accounts.
The deal was priced at 145bp over three-month Libor, which was at the tight end of the final price guidance of between 145bp and 150bp, and also inside the initial guidance of 180bp area.