Like their Indian counterparts, Korean banks are prone to issuing as a herd. And, in coming weeks, they are expected to hit the debt capital markets in full force.
Hana Bank has mandated Barclays Capital, Citi, HSBC and Standard Chartered for a US dollar global bond. The Korean commercial bank is eyeing a Reg-S/144a benchmark and could issue a five-year bond.
Hana Bank is the flagship subsidiary of Hana Financial Group, which in November last year agreed to acquire US buyout fund Lone Star’s 51.02% stake in Korea Exchange Bank (KEB). Hana Financial Group will pay up to W4.7 trillion ($4.1 billion) for the majority stake with the financing coming partly from the sale of equity and debt and partly from internal resources, including dividend payments from Hana Bank. However, a source said Hana Bank’s proposed bond issue has nothing to do with the KEB acquisition; rather the proceeds will be used for general corporate purposes.
Hana Bank is expected to raise about $500 million to $1 billion through its global bond sale, although a firm decision on size has yet to be made and will depend on market conditions at the time. The deal is expected around March or April, according to market sources.
Elsewhere, Korea Export-Import Bank (Kexim) has sent out a request for proposals (RFP) for a benchmark global bond and is expected to appoint banks very soon. As the Korean policy bank usually goes ahead with a deal quickly once it finalises a mandate, it could be the first Korean bank to issue in 2011. A deal could print as early as next week.
Korea Development Bank too has sent out a RFP for a benchmark global bond. The deadline for submissions was yesterday. Most of the Korean banks are expected to issue five or 5.5-year bonds as they want to match their assets (loans) with their liabilities and their outstanding loans have shorter tenors. But there is talk that KDB could issue a 10-year bond.
Finally, Shinhan Bank is also eyeing a US dollar global benchmark. The bank mandated seven arrangers -- Bank of America Merrill Lynch, BNP Paribas, HSBC, ING, J.P Morgan, Mizuho and Royal Bank of Scotland – last year but did not go ahead with a print. It is expected to return with a deal this year.
Some Korean companies are also planning deals, but these are expected to come to market after the Korean banks are done with their round of fundraising.
Away from Korean issuers, the Republic of Indonesia is said to have chosen Deutsche Bank, J.P. Morgan and UBS for its global bond. The ROI is expected to issue off its global medium-term note (MTN) programme. A kick-off meeting will take place tomorrow after which a common strategy will be finalised. However, a deal print will take a bit more time as its MTN documents need to be updated.
Elsewhere, LDK Solar, the world’s largest producer of solar wafers, has mandated Citi and Morgan Stanley for a Rmb1.5 billion ($227 million) synthetic offshore bond. The bonds will be renminbi-denominated but US dollar-settled. Roadshows were held in Hong Kong last Friday and yesterday and will continue in Singapore today and in London tomorrow. LDK will be the first Chinese company outside the property sector to issue a renminbi-denominated US dollar-settled bond.
