이 기사는 2019년 10월 29일 16:39 thebell 에 표출된 기사입니다.

Korea Southern Power (KOSPO) successfully raises 300 million Australian dollars in its debut Kangaroo bonds sale.

The state-run electric power supplier sells a 300 million Australian dollar bond on October 30 (settlement date). The issue was structured as a five-year fixed rate notes (FRN) single tranche. The state-run company announced the Kangaroo bond issue on October 22 and received Indication of Interest (IOI). Based on the results, KOSPO ran pricing process on October 23.

The bond sale was oversubscribed, receiving around 550 million Australian dollar in orders, which is unusual for Kangaroo bonds.

Investors' interest in the sale was particularly strong among Australian onshore investors. Thanks to massive orders from Australian major institutions, KOSPO increased allocation to onshore institutions to 74 percent. Asian institutions accounted for 26 percent. Normally when Kangaroo bonds are sold, Australian institutions take up a maximum of 40 percent and the remaining 60 percent goes to Asian institutions.

The Korean company met with strong demand from investors, allowing it to tighten the spread to 97 basis points plus the three-month bank bill swap rate (BBSW). Considering KOSPO originally set initial price guidance (IPG) at 97~103 basis points over BBSW, the rate was a maximum of six basis points lower than the IPG. Normally a Kangaroo bond sale is considered a success if an issuer could make five basis points reduction compared to IPG.

KOSPO targets the Kangaroo bond market, taking advantage of its status as double-A rated non-financial institution. In the Australian market, a bond issued by non-financial institutions is scarce as the issuance is dominated by financial institutions. Also, it is difficult for non-financial institutions to sell bonds there because the market prefers bonds single-A rated or better.

"The Kangaroo bond market has had enough issuance from financial institutions and sovereign, supranational and agency (SSA), but amount of bonds issued by non-financial institutions was relatively small. As there are few bonds issued by double-A rated non-financial institutions, interest was strong among institutions that have to buy bonds for their portfolio diversification," said an industry source.

KOSPO also appealed its environment-friendly business to meet investors' demand. During its roadshow taken place in late September, the company noticed some kind of avoidance of investment in coal-fired power generation businesses among institutions. Considering this, the company put much effort into promoting environment-friendly aspects of U.S. shale gas as an energy source and the fact that proceeds from the bond sale will be used to that environment-friendly business.

For the latest bond issuance, the power supplier established 2 billion Australian dollar global medium-term note (MTN) program, ratings assigned by Moody's. KOSPO recently has been focusing on currency diversification. Last year, KOSPO had prepared the issuance of Swiss franc-denominated bonds targeting early this year, though scrapped the plan later.

(By reporter Pi Hye-rim)