SK Hynix sets a Korean private issue record with $2.5 bn overseas debt sale

SK Hynix Inc. raised $2.5 billion in multi-tranche U.S. dollar-denominated bond issues, a record debt financing by a Korean Inc.

The Korean chipmaker on Wednesday issued $500 million in three-year bonds and $1 billion in five-year and 10-year bonds each to institutions in North America, Europe and Asia.

Orders totaled $12.3 billion, nearly five times the allotted amount. Its 10-year green bonds drew $5.4 billion, more than five times the amount offered. SK Hynix claimed it was the first in the chipmaking industry to sell green bonds, which would be used to directly finance environmental projects.

The explosive demand enabled the company to sell its bonds at a favorable rate. The annual coupon for the three-year issues was set at 1.06 percent, the five-year at 1.52 percent and the 10-year at 2.49 percent, significantly below the desired bands.

Around 70 to 75 percent of the orders came from global asset managers, with demand particularly high for bonds of five years or longer, according to a market insider.

SK Hynix notes are a record for a Korean Inc. The previous largest issuer was LG Chem Ltd. for an offering in $1.56 billion in 2019.

Industry observers believe this will help other Korean companies in their foreign debt selling. SK Hynix¡¯s stellar results came despite its lackluster credit ratings. It has a long-term credit rating of Baa2 from Moody¡¯s and BBB- from Standard & Poor¡¯s.

SK Battery America will be the next local company to tap offshore debt later this month.

SK Hynix reported an operating profit of 4.05 trillion won in the first three quarters of 2020, up 63 percent from a year earlier.

Prospects this year are even better. Analysts project its earnings in 2021 to reach 9 trillion won.

The proceeds from the bond sale would be used to bolster its presence in the memory chip sector and to invest in green businesses.

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