The Korean banking is joining a long queue of prospective borrowers from the Republic with plans for its second subordinated debt offering in the space of a year. The bank is hoping to raise up to $125 million from the deal, but while the small size and many available benchmarks should make the process relatively straightforward, market conditions for Korean debt remain far from strong.
In September 2002, for example, KorAm raised $200 million from a lower tier 2 deal led by Citigroup. This was priced at par with a coupon of 5.64% to yield 260bp over Treasuries. And while the deal has been one of Asia's better performers over the past month tightening 95bp, this still only brings it back to more or less where it was at launch.
Yesterday, the deal was bid at 102.19% to yield 5.07% or 260bp over Treasuries. Likewise its nearest comparables in the Korean banking sector have also performed badly. Hanvit Bank's 11.75% March 2005 bond was bid at 113.25% to yield 3.96% or 257bp over Treasuries. Last September it was trading at 240bp over.
KorAm's original deal went to a relatively small handful of investors - 17 - and was heavily concentrated in Korea, which took up 80% of the bonds.
