Will PP market get some of the ‘Korean bond boom’ or has the ship sailed?

June 16, 2009

Has the private placement market missed the boat on Korea? Most people in our market remember this past winter when a number of South Korean companies were looking at issuing private placements. Among those companies were Korea Expressway Corp., SK Energy Co. Ltd., and financial institutions Korea Development Bank and Export-Import Bank of Korea were also thought likely candidates.

But that was months ago, when spreads were still in the mid-500s for some NAIC-2s, and the market was still shaky (or at least, shakier). The talk seemed to die down shortly thereafter, without producing a major Korean private placement.

So was I the only one who read with interest about Korean Hydro & Nuclear Power, which tapped the public bond market for $1 billion last week? According to the Wall Street Journal, the five-year deal was “the first issuance by a quasi government company in Asia ex-Japan since the financial crisis hit last September.” The deal reportedly got $8 billion in orders, which allowed it to balloon from $500 million to $1 billion. The deal was led by Barclays Capital, Citigroup, Deutsche Bank, and Goldman Sachs.

Granted, this is the public market we’re talking about here, but last week the Associated Press wrote that the deal is “expected to kick off a series of major overseas debt sales this year from state-owned South Korean firms including Korea National Oil Corp. and Korea Gas.”

So is there any hope that the private market might see even a little bit of the action? Well, a quick round-up this week of some agents and investors says there is no renewed talk about Korean issuers coming to the private market. At least not for now. But if this supposed wave of Korean quasi-government companies comes to the U.S. market, maybe there is still a chance…

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