Shinhan Bank ups Kangaroo offering, confirming robust demand for Korean papers

[Provided by Maekyung Media Group]

Shinhan Bank on Tuesday has scaled up its overseas offering to sell 400 million Australian dollars ($260 million) worth Kangaroo bonds upon doubled subscription to suggest recovered offshore demand in South Korean top-tier debt despite signs of liquidity squeeze in Korean Inc.

The Korean lending major was able to price three-year Kangaroo bonds worth $400 million Australian dollars 1.95 percentage points above the three-month Australian interbank rate, or a coupon rate of 5.01 percent for the first three months.

It upped the offering from original $300 million worth upon receiving bids worth $650 million Australian dollars.

The issuance served as a kind of a gauge for Korean papers amid wobbly prices following the notice of a decision by midsized Korean insurer not to act the first call option on $500 million 30-year bonds. Amid broad negative ramifications, Heungkuk Life decided to call on the global bonds on the first Nov. 9 due date through funding from parent group and domestic financial institutions.

Shinhan Financial Group Chairman Cho Yong-byoung has commanded to go on with the issue regardless of the unfavorable conditions.

The worst is however not over in domestic debt market due to overwhelming supply and still-jittery sentiment after near-default crisis over a municipal debt.

[Provided by Maekyung Media Group]

The ruling People Power Party is proposing to stretch annual debt ceiling for Korea Electric Power Corporation (KEPCO) by five to 10 times in light of the troubles of the state monopoly from unfazed strength in fuel import costs.

KEPCO has been swamping the debt market with its AAA-rated bonds on par with sovereign debt to sustain operations along with bank issues on increased corporate loans to leave little demand for lower-grade corporate debt.

“The government may coordinate KEPCO to seek bank loans instead, but oversupply issue is expected to weight and strain the corporate debt market until the first half of next year,” said Kim Sang-hoon, a researcher at Shinhan Securities.

By Han Woo-ram, Kang Bong-jin, Choo Dong-hoon, and Lee Eun-joo