SK Broadband Co., the internet and television service unit wholly-owned by South Korea’s leading telecommunications company SK Telecom Co., issued $300 million worth euro-denominated bonds at a cheaper than expected rate thanks to its high creditworthiness.
According to sources from the investment banking industry on Tuesday, the five-year euro bonds were issued at a coupon yield of 3.875 percent, 117.5 basis points above the five-year U.S. Treasury yield. The spread was 27.5 basis points lower than its initial guidance thanks to overwhelming demand of $2 billion from 125 institutional investors during the book-building session. The offering was oversubscribed by 6.66 times, the highest among foreign currency-denominated papers issued by domestic companies this year.
The heated demand is partly attributable to its high credit rating. The company’s debts received A- rating from global credit rating agency S&P, the same rating with SK Telecom, Hyundai Motor and KT.
The proceeds would be used to repay its existing debts and for other corporate expenses. Citigroup Global Markets Securities, HSBC and BNP Paribas were joint book runners. About 85 percent of the investors were from Asia while the rest 15 percent from Europe.
It has been five years since the company first issued foreign currency-denominated debts at a spread of 170 basis points in 2013 after it went under SK Group.
By Chung Hee-young and Choi Mira
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