KoFC is seeking to issue as much as €500m ($643m) in bonds with maturities of five years of seven years, but the timing of the launch will be designated once the bookrunners are selected, the official said. The five year euro swap versus dollars rose from minus 70bp at the end of 2012 to minus 20bp as of July 9, he added.
KoFC’s euro deal comes after Korea Development Bank made its first foray into the euro market since 2007 on May 24 with a €500 five year bond that priced at 70bp over mid-swaps, which was issued 15bp inside initial price talk.
Bankers used Export-Import Bank of Korea’s €750m 2% 2020s that Kexim issued on April 24 and the further €250m tap as the main comparable issue for the KDB deal. These trades will also serve as comparables for KoFC's upcoming trade, said the official.
Positive feedback from European investors in mid-June has helped KoFC finalise its decision to tap the euro market.
“Investors are looking to diversify into high quality credits because the liquidity is there from the region’s own QE [quantitative easing] but the amount of double-A credits have diminished because of sovereign and corporate downgrades,” said the official.
KoFC is rated Aa3 by Moody’s, A+ by Standard & Poor’s and AA- by Fitch.
Barclays, BNP Paribas, Commerzbank, HSBC KDB Asia and UBS led KDB’s deal, while Barclays, Crédit Agricole, Deutsche Bank, Standard Chartered Bank and UBS were bookrunners on Kexim’s transaction.