K-water attracts strong investor demand for bond offering Company draws $2 billion in orders from 120 institutions in Asia and Europe

Translated by Kim So-in 공개 2022-05-02 08:12:44

이 기사는 2022년 05월 02일 08:04 더벨 유료페이지에 표출된 기사입니다.

Korea Water Resources Corporation (K-water) has successfully sold its foreign currency-denominated bond, drawing $2 billion (2.5 trillion won) in orders from some 120 institutions.

K-water held bookbuilding for investors in Asian and Europe on April 20 to sell a note with 3-year maturity. The state-owned company initially proposed a pricing guidance of 115bp over the yield on 3-year U.S. Treasury notes. Citigroup Global Markets Securities, Credit Agricole and Societe Generale handled the bookbuilding process.

K-water and bookrunners set the initial pricing guidance at 115bp given frozen investor sentiment. They planned to attract strong demands based on the investor-friendly initial pricing guidance and bring the final pricing guidance tighter later.

Investor sentiment has turned sour recently as bond yields soared on hawkish comment from Federal Reserve Bank of St. Louis President James Bullard, who said late on April 18 afternoon in the U.S. that he would not rule out a 75bp rate hike. Russia’s attack on Ukraine’s Donbas region also dampened investor sentiment. Mirae Asset Securities recently canceled its U.S. dollar bond sale amid a spike in Treasury yields.

Despite unfavorable market conditions, K-water decided to proceed with its bond issuance plan and drew $1.9 in orders from 126 institutions in its bookbuilding. Orders from Asian investors accounted for 74% of the total and investors in Europe and the Middle East accounted for 26%. Asset managers accounted for 35% of the orders, with insurers and pension fund accounting for 27%, banks 21%, international organizations and central banks 15% and private banks and brokerage firms 2%.

Most of the orders were made by central banks and major asset managers, which helped the company to smoothly raise $350 million to be used to refinance debts.

Final price was set at 80bp above the 3-year Treasury yield, which is 35bp below its initial pricing guidance. The note’s coupon rate and yield were set at 3.50% and 3.617%, respectively.

The bond was issued in the form of green bonds. The bond’s ESG rating was offered by global ESG research and data company Sustainalytics.

K-water said in its investor call that the proceeds will be used for sustainable water management and renewable energy development projects, dispelling greenwashing concerns.

K-water’s stable credit rating also appealed to investors. K-water has a rating of Aa2 by credit ratings agency Moody's and AA by S&P, on par with South Korea’s sovereign credit rating.

K-water issued a water bond for the first time in Asia in May 2018 and
raised 50 billion won in the first won-denominated SRI (Socially Responsible Investment) bond sale in March 2021. The bond received the highest possible G1 rating from Korea Ratings. (Reporting by Ji-won Kim)
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