SK REITs (395400, rated AA-) and Jeju Bank (006220, rated A+) have wrapped up their first public bond offerings of the year. Both secured orders exceeding their targets in institutional book-building, even as uncertainty grows in the bond market on concerns over high interest rates.
SK REITs held book-building for institutional investors on the 14th to raise 100 billion won, according to investment banking sources. Institutions placed bids totaling 365 billion won. Specifically, the one-year tranche drew 170 billion won against a 40 billion won target, while the two-year tranche attracted 195 billion won against a 60 billion won target.
The coupon is expected to be set at levels normally traded in the market. Ahead of the book-building, SK REITs set a target yield band of minus 30 to plus 30 basis points (one basis point equals 0.01 percentage point) over its individual benchmark yield, the company-specific rate assessed by private bond-rating agencies. The results showed both the one-year and two-year tranches filled their targets at the same level as the benchmark yield for matching maturities.
Jeju Bank, which closed its book-building the same day, secured demand roughly in line with its target. The bank sought to issue 34 billion won in 30-year perpetual bonds and received total orders of 48 billion won. Jeju Bank had set a target yield band of 5.20% to 5.90% ahead of the book-building, and the final rate is expected to be determined at the top of that range, 5.90%.
The two issuers plan to use the proceeds differently. SK REITs said it would use the funds from the public bond sale to refinance 90 billion won in public bonds and 95 billion won in electronic short-term notes maturing on Oct. 2 this year. Jeju Bank, by contrast, is largely raising operating funds to bolster capital adequacy. Its BIS capital ratio stood at 14.52% at the end of the first half, above the industry average, but the bank said it wants to manage the ratio preemptively in preparation for tighter regulation.
NH Investment & Securities, Korea Investment & Securities, SK Securities and Samsung Securities served as lead managers for the SK REITs bond sale. Hanyang Securities was the sole manager for Jeju Bank's perpetual bond issue.
