(Adds analyst’s comment in fourth paragraph.)
Feb. 3 (Bloomberg) -- Busan Bank’s first dollar-denominated bonds in almost three years rose in Asian trading after investors offered to buy more than sixteen times the available notes.
The Busan, South Korea-based lender raised $300 million of five-year bonds yesterday, according to a statement from the company today. The notes were priced to yield 4.275 percent, or 355 basis points more than similar-maturity Treasuries. The spread narrowed to 330 basis points as of 16:58 p.m. in Hong Kong, according to Nomura Holdings Inc. prices.
Korean companies have raised more than 24 percent of the record $27.5 billion they got from sales of international bonds last year, according to data compiled by Bloomberg. Busan Bank last sold debt denominated in dollars in May 2009 when it raised $50 million from floating-rate notes, the data show.
“It’s a very well-priced deal and leaves enough juice for investors to benefit,” said William Mak, a Hong Kong-based credit analyst at Nomura. “Fair value is about 345 basis points looking at relative value but if you factor in the scarcity value of the small issue size then the bond could potentially continue to trade inside that.”
The bank received about $5 billion of orders from more than 200 accounts, the company said in the statement. Almost 90 percent of the deal was sold to Asia-based investors, according to a person familiar with matter, who asked not to be identified because the details are private.
Fund managers were allocated 45 percent of the available notes, with banks getting 21 percent, insurers 17 percent, private banks 12 percent, and corporates and other investors taking 5 percent, the person said.
“Investors expressed high interest in our debt,” Sung Se Whan, vice president and managing director of Busan, said in the company’s e-mailed comments. “We were able to price our bonds comparable to other commercial banks.”
Citigroup Inc., Credit Agricole SA and UBS AG managed the sale, according to the company’s statement.
The South Korean bank has more than 2.87 trillion won ($2.57 billion) of bonds maturing by the end of 2018, according to data compiled by Bloomberg.
--With assistance from Tanya Angerer in Singapore. Editors: Shelley Smith, Michael Shanahan
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