Jung-Bon Woo, Head of finance and
Q: Why did you access the Eurobond market for the first time this year?
We have very long term duration funding requirements as a power generation company. The average lifespan of a nuclear power plant is about 60 years, so we always need to target relatively long term funding.
We are also planning a new nuclear power plant that requires long term funding, so we wanted to raise capital with a longer tenor than the three year bonds that are prevalent in the domestic bond market. As a result, we targeted the Eurobond market with our $200m five year issue, which gained a good market response.
Unfortunately 10 year dollar funding would have proved to be too expensive for us as a first time borrower.
The domestic market is getting more liquid at five years and longer, and we are looking at domestic won opportunities to build a longer maturity profile.
Q: Do you have more funding needs later in the year and would you anticipate going offshore once again?
At this time I do not think that we have any need to access the international bond market for more funding this year.
However, in the second half we will review our fundraising plans, which might include international market activity. We do have fundraising requirements for our new nuclear power plant, but have not yet decided how to raise the funding.
In 2004 we will need to raise around W1tr and we could well return to the international market again.
We are considering whether to use the Japanese yen market through a Samurai bond issue.
Q: KHNP is already the largest generation provider in Korea. Is your market share likely to grow or diminish in future years?
We provide about 42% of electricity generation in Korea. The long term government projections of the growth in electricity consumption means that nuclear power demand will rise and we will increase our capacity to meet this.
Our market share is expected to increase to 46% by 2016. This will require a step-by-step, continuous funding programme to help support this expansion and we are likely to use the capital markets to help meet this need in the future. *