이 기사는 2019년 10월 23일 08:00 thebell 에 표출된 기사입니다.

South Korea's state-run Industrial Bank of Korea (IBK) recently sold 600 million dollar global bonds at a record-low rate. The spread of its three-year floating rate note (FRN) was the narrowest among all FRNs that have been issued in Korean Paper market this year.

On October 17, IBK successfully issued 600 million dollar worth global bonds (144A/RegS). The issue was structured as three-year FRN and five-year fixed rate note (FXD). The lender issued 300 million bonds each. Korean Paper refers to foreign currency-denominated securities sold abroad by South Korean entities.

The three-year FRN was priced at a spread of 40 basis points over three-month Libor rate. This marks the narrowest spread among Korean Paper FRNs since the beginning of the year. Previously, the Export-Import Bank of Korea issued three-year FRN at a spread of 52.5 basis points plus Libor rate in June and Korea Development Bank (KDB) issued at a spread of 47.5 basis points plus Libor rate in September, respectively.

The five-year FXD was issued at 60 basis points plus five-year US Treasury yield. The coupon rate was set at 2.215 percent. IBK dragged down the spread to the level that KDB issued the five-year FXD in September. It is more meaningful that while KDB's credit ratings are on a par with South Korea's sovereign credit rating, IBK's ratings are on par or lower than the country's ratings.

While Korean Paper issuers continue to sell bonds at a lower rate, KDB's bond issuance was especially helpful for IBK as both are South Korea's key policy banks. In September, KDB garnered orders more than four times the issue amount during the book-building process and it could set the issuance rate lower than the market interest rate.

The fact that IBK issues less amount of Korean Paper compared to other government-run banks like the Export-Import Bank of Korea also heightened its popularity.

IBK took an agile approach to market changes. In its investment prospectus, the lender stated that the bond can be issued in dollars and euros.

After deciding to issue bonds in dollars, the bank differentiated itself by issuing multi-tranche bonds. Investors' interest in FRN has heightened as the short-term yield curve has been inverted over the past one~two years. To take advantage of the phenomenon, the lender issued three-year bonds at a floating rate.

As a result, the lender garnered 3.2 billion dollar in orders during its book-building process, five times the issue amount. The three-year FRN alone received 1.65 billion dollar in orders from 80 institutions. Strong demand from investors allowed the Korean lender tightened the spreads by 20~25 basis points compared to the initial price guidance (IPG).

(By reporter Pi Hye-rim)