BONDS: Kexim delivers largest Korean Samurai
Source: Reuters/Kim Kyung Hoon
Well-wishers wave Japanese flags at the Imperial Palace in Tokyo
Kexim, rated A1/A/A+/A+ (Moody’s/S&P/Fitch/R&I), priced a ¥51.4bn 1.11% two-year tranche at 70bp over yen offer-side swaps, a ¥41.2bn 1.25% three-year note at plus 83bp and a ¥7.4bn 1.38% five-year at plus 90bp. BNP Paribas, Daiwa, Deutsche Bank, JP Morgan and Mizuho were joint lead managers.
As Europe diminishes as an investment destination, Korean credits familiar to local investors are taking a bigger share of the pie. “It feels like Japanese investors are finally starting to warm up and feel more familiar with Korean names. It is shocking because, one year ago, this kind of size was unimaginable,” said a banker close to the deal.
In the end, the spread drove the blowout demand for the first wholesale Samurai offering for the fiscal 2012. Kexim capped the trade at ¥100bn. Demand was concentrated in the shorter-dated tranches.
The longer bonds were seen to be more aggressively priced, given the twisted and uneven shape of the US dollar/yen basis swap curve. Nevertheless, the shorter tenors were attractive to local investors.
Pricing on the two-year tranche was the most aggressive, inside of the theoretical US dollar curve, while the five-year was the surprisnly generous, coming at a premium to Kexim’s dollar-trading levels, but at a fair and theoritical new dollar-issue level. The final spreads were in the middle of the initial guidance ranges, offer-side swaps plus 60bp–80bp for the two-year, plus 70bp–90bp for the three-year and plus 80bp–100bp for five-year.
Last July, the policy bank printed a similarly structured ¥80bn three-tranche Samurai, but the final size received a powerful boost from a string of cancelled Samurais just before Kexim. The 2s/3s curve was 10bp and the 3/5 was 13bp. The deal comprised a ¥58.4bn 0.93% two-year tranche at plus 50bp, a ¥11.6bn 1.06% three-year at plus 60bp and a ¥10bn 1.32% five-year plus 73bp. Bank of America Merrill Lynch, Citigroup, Daiwa and Mizuho managed that transaction.
