Lotte Construction Successfully Issues Corporate Bonds with Support from Chaean Fund
Raised 250 Billion Won... Market Orders 40 Billion Won
Chaean Fund Supports 120 Billion Won · KDB Provides 90 Billion Won
[Asia Economy Reporter Hwang Yoon-joo] Lotte Construction has succeeded in fully selling its corporate bonds through a demand forecast. However, since most of the funding was taken up by the Bond Market Stabilization Fund (Cha-an Fund) and the Korea Development Bank, the result is being evaluated as a half success.
According to the financial investment industry on the 26th, Lotte Construction succeeded in raising funds through a demand forecast for corporate bonds worth 250 billion KRW on the same day. Institutional investors placed orders worth 40 billion KRW. However, the Cha-an Fund purchased 120 billion KRW, and the Korea Development Bank, which participated as an underwriter, also bought 90 billion KRW worth, so there was no unsold portion.
Considering the growing negative perception of the construction industry outlook recently, Lotte Construction obtained a credit rating of 'AA+ (negative)' instead of its existing 'A+ (negative)' by leveraging Lotte Chemical's payment guarantee. The tranche was also set short with a one-year maturity.
The spread will be issued at a level adding +70 basis points to the individual average market yield of Lotte Chemical's one-year maturity corporate bonds, which is the top end of the desired band. Lotte Construction plans to use the funds raised this time to repay Lotte Chemical's privately placed bonds maturing in mid-January next year.
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Meanwhile, eight securities firms including NH Investment & Securities, KB Securities, Hana Securities, Korea Investment & Securities, Shinhan Investment Corp., Samsung Securities, Kiwoom Securities, and Mirae Asset Securities were selected as lead underwriters for this corporate bond issuance, and the Korea Development Bank also participated as an underwriter.
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