SK Networks successfully sells bonds amid poor market conditions Proceeds will be used to repay existing debts
Translated by Kim So-in 공개 2022-04-14 08:16:13
이 기사는 2022년 04월 14일 08:09 thebell 에 표출된 기사입니다.
South Korea’s SK Networks attracted bids worth twice the offering in a bookbuilding process for its planned bond issuance.SK Networks attracted bids of 345 billion won ($281 million) for a 120 billion won 3-year bond issue and 40 billion won for a 30 billion won 5-year bond issue in its bookbuilding process held on Monday.
Analysts said the demand was strong as the company has maintained financial soundness through a sale of non-core assets and investments in new growth engines such as car rental, light maintenance and home appliance rental businesses.
The company proposed yields ranging from minus 30 bps to plus 30 bps of the average yield for its bonds. It drew bids worth 170 billion won at plus 15 bps for the 3-year bond and bids worth 40 billion won at plus 30 bps for the 5-year bond. The 5-year bond is expected to be priced at the top end of the proposed range and the 3-year bond is likely to be priced at the upper end of the range given a possible increase in offering.
SK Networks, which had planned to increase the offering to up to 300 billion won, is expected to increase the amount to about 250 billion won. The proceeds from the bond sale will be entirely used to repay existing debts.
In the bookbuilding process, most of the major institutions, including National Pension Service, invested in the 3-year bond. A narrow yield spread between the 3-year and 5-year bonds made investors flock into the shorter-maturity bond. According to Korea Asset Pricing, a yield on SK Networks’ 3-year bond was 3.642%, only 4 bps lower than the 5-year bond’s 3.689%.
“In a situation where the difference between short- and long-term interest rates is not large, the company successfully sold its bonds by allocating an appropriate proportion to the relatively unpopular 5-year bond,” an industry source. “This was a huge success given the worst market conditions where the yield on the 3-year government bond jumped nearly 20bps a day.” (Reporting by Yoon-shin Choi)
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