이 기사는 2019년 10월 01일 08:00 thebell 에 표출된 기사입니다.

KEB Hana Bank, a major South Korean lender, succeeded in the bond issuance taken place at the end of last month despite uncertainties in the bond market. An accurate prediction of investor demands was the key to its popularity.

The lender issued its 400 million dollar global bond on September 25. The tranche consisted solely of three-year floating rate notes (FRN). The bank initially planned 350 million dollar issue to refinance existing debt, but later increased the amount as orders swelled during the pricing process.

The lender attracted investors by selling FRN only. Uncertainties on the direction of interest rates heightened after the Federal Reserve's another rate cut last month. KEB Hana took this into consideration and chose issue at a floating rate with three-year maturities to help investors avoid interest rate risk.

When domestic companies issue FRN, they typically sell FRN and fixed rate notes (FXD) together to meet investors' demands. So far this year, Lotte Property & Development has been the only 'Korean Paper' issuer who sold FRN only, except for Formosa bond issuance. Korean Paper refers to foreign currency-denominated securities sold abroad by South Korean entities.

The deal showed the popularity with the lender receiving 3.4 billion dollar in orders from 125 institutions. Around 2.1 billion dollar in bids came in within the first three hours of the pricing. As giant investors were concentrated in Asia and the U.S., only 4 percent of the offering was allocated to European institutions.

KEB Hana could reduce financing cost thanks to strong investors' interest. The spread was 70 basis points, 30 basis points tighter than its Initial Price Guidance (IPG). IPG was three-month Libor plus 100 basis points.

Continued popularity of Korean Paper signals positive outlook of domestic commercial banks' fundraising in foreign currencies. Last month, Korean Development Bank raised 1 billion dollar as the first dollar-denominated bond issuer after the Federal Reserve's latest rate cut, and KEB Hana followed suit. Woori Bank has issued a dollar-denominated hybrid bond late last month. Industrial Bank of Korea and Shinhan Bank are planning to issue Korean Paper.

(By reporter Pi Hye-rim)