This article was published on Sept. 7, 2026 at 5:47 p.m. on Signal, a capital markets compass service.
Lotte Auto Lease drew more than five times its target in a public bond offering, a result that reflects the credit strength lent by a payment guarantee from parent company Lotte Rental. All of the proceeds will go toward refinancing commercial paper approaching maturity.
Lotte Auto Lease secured 165 billion won in bids from institutional investors in book-building for a 30 billion won bond issue, according to investment banking sources on the 7th. By tranche, the 20 billion won 1.5-year notes attracted 75 billion won, while the 10 billion won two-year notes drew 90 billion won. That amounts to 3.75 times and nine times the respective offering amounts.
Lotte Auto Lease set a target range of minus 40 to plus 40 basis points (1 bp = 0.01 percentage point) over the average yield on Lotte Rental's individual bonds as assessed by private bond pricing firms. The 1.5-year tranche filled at plus 29 bp and the two-year tranche at plus 19 bp. The company left room to increase the issue to as much as 60 billion won, raising the possibility that it will upsize the deal to reflect the book-building result. Mirae Asset Securities, Shinhan Securities, Kiwoom Securities and KB Securities served as lead managers.
The company will use all of the proceeds to repay existing debt. It plans to refinance 30 billion won in commercial paper maturing on the 18th of this month and on the 1st of next month. The move also lets the company extend maturities by shifting from commercial paper, a short-term funding tool, to corporate bonds.
The payment guarantee on principal and interest from parent Lotte Rental was the key factor behind the strong demand, analysts said. With Lotte Rental's guarantee in place, the issue was rated A+ with a stable outlook by domestic credit rating agencies. Lotte Auto Lease was established in 2011 when Lotte Rental spun off its auto lease and freight vehicle divisions. It is a specialized credit finance company focused on auto financing, with its main businesses in maintenance auto leases for commercial vehicles such as trucks, operating leases for imported commercial vehicles and purchase financing for used commercial vehicles.
Lotte Rental is currently in the process of being sold to global private equity firm TPG. Despite the uncertainty of a change in its largest shareholder as it prepares to stand on its own outside the Lotte Group, the bond market continued to recognize the credit standing of the guarantor and the fundamentals of the subsidiary, market watchers said.
