Hyundai Capital Services became the first triple-B rated
credit from Korea to sell dollar-denominated global bonds this
year after launching a tightly priced $500m deal late on
The Baa2/BBB rated consumer
lender priced the 5.5 year benchmark late on Thursday
morning US time at 99.543 with a 6% coupon, equal to a spread
of 369.4bp over US Treasuries or 320bp over mid-swaps.
That was inside guidance, set at 325bp-350bp over mid-swaps on
Wednesday by bookrunners Citigroup, Deutsche Bank, Goldman
Sachs, JPMorgan, Morgan Stanley and Royal Bank of Scotland.
That would have equated to a spread of 375bp-400bp over US
Treasuries for the Reg S/144A deal.
The tighter pricing came after risk appetite picked up sharply
during New York market hours on Thursday, driving strong US
demand for the rare name, said bankers on the deal. This was
triggered by news that the US grew by 3.5% year-on-year for the
third quarter above the consensus 3.3% forecast by
The deal follows an extensive roadshow this week by South
Koreas largest consumer finance company in Singapore,
Hong Kong, Boston, London and New York on Wednesday. The issuer
was last in the market in January 2007, launching a $400m
five-year Reg S bond at mid-swaps plus 58bp. That 2012 bond was
trading at between 290bp-295bp over swaps on Wednesday morning
and had widened to 300bp-325bp at the time of pricing.
However, bankers say bid/offer spreads vary from trader to
trader due to the illiquidity in Asian triple-B cash bonds. As
a result, "investor feedback from the regular real money guys"
during the roadshow generated the pricing guidance, said a
banker on the deal.
The issue demonstrates the investor appetite for investment
grade private sector issues in non-Japan Asia after a flood of
sovereign backed issuance in Korea in recent months. "This
could serve as a liquid benchmark for the regions private
issuers," said one lead. The tight pricing and high demand
contrasts with the sell-off in Asian credit spreads and
scrapped deals from regional peers this week.
Hyundai is also be the first triple-B credit from Korea to sell
bonds in the dollar market since SK Energy sold $450m of five
year bonds in June 2008, and the deal illustrates the strength
of investors appetite for private sector Korean risk
after a spate of new issues from the countrys public
sector. Hyundai Capital Services is a Korean auto lender part
owned by General Electric.