The transaction was driven by reverse enquiry and was fully covered with 14 investors from Europe and Asia taking part. The rationale for the issuer was to avoid leaning into what is a heavy supply calendar with a benchmark global deal while at the same time getting a reasonable size deal done at highly attractive levels.
By using the eurobond format the issuer achieved lower issuance costs compared to a globally structured deal.
The deal marks a divergence from the regular benchmark issuance strategies usually associated with the Korean policy banks. This strategy is more in line with that of the large Australian double-A banks, known as the smartest FIG issuers, who do a mix of MTN business, eurobond issuance and select benchmark global deals.
Indeed, the deal will be a very good result for the quasi-sovereign in terms of pricing comparative to its and its contemporaryÆs curve.
The policy bank has several existing FRNs in the market. It completed a Ç500 million deal via ABN AMRO and Barclays Capital in March. Those notes are currently trading at 23bp over Euribor, which is equivalent to 21.5bp over dollar Libor.
Additionally, In November 2005, KDB priced a $500 million seven-year FRN at 28bp over Libor. That deal is now trading at 23bp over Libor.
Fellow Korean policy bank, the Export Import Bank of Korea (Kexim) has a $500 million issue - which became, at the time, the first Korea issuer to break through the 25bp over Libor barrier in the five-year sector. That deal priced at par on a coupon of 24bp over Libor, but has tightened to 21bp over.
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