[Market Insight] SAMYANGHOLDINGS Sees Five Times Target Amount in Corporate Bond Subscriptions… 5-Year Notes Struggle
560 billion won in orders for a 100 billion won offering… 5.6-fold oversubscription
2- and 3-Year Bonds Trade Below Yield Curve… 5-Year Bonds Meet Target Amount at +20bp
To be used for corporate bond refinancing… Considering an increase of up to 200 billion won
[Edaily Marketin Reporter KIM YEON-SEO ] SAMYANGHOLDINGS(000070)(AA-) raised more than five times the target amount during its corporate bond bookbuilding. While the 2-year and 3-year bonds were fully subscribed at yields below their respective market averages, the 5-year bond recorded a premium yield, reflecting mixed investor demand across different maturities.
(Photo courtesy of SAMYANGHOLDINGS)
According to the investment banking (IB) industry on the 23rd, SAMYANGHOLDINGS received a total of 560 billion won in orders from institutional investors during a bookbuilding process for the issuance of corporate bonds totaling 100 billion won. This amount is 5.6 times the target offering amount.
By tranche (maturity), the 2-year tranche, which sought to raise 30 billion won, attracted 240 billion won in orders, while the 3-year tranche, targeting 50 billion won, drew 295 billion won. In contrast, the 5-year tranche, aiming to raise 20 billion won, secured only 25 billion won in orders.
SAMYANGHOLDINGS set its target yield band at -30 basis points (bps; 1 bp = 0.01 percentage point) to +30 bps relative to the individual market average yield across all maturities. The bookbuilding results showed that both the 2-year and 3-year bonds were fully subscribed at -3 bps relative to the individual market average yield. In contrast, the 5-year bond was fully subscribed at +20 bps, demonstrating a yield differential.
In particular, orders for the 2-year and 3-year bonds reached 8 times and 5.9 times the target amount, respectively, while orders for the 5-year bond amounted to only 1.25 times the target. This indicates that investment demand was concentrated on corporate bonds with relatively shorter maturities.
Based on the results of this bookbuilding, SAMYANGHOLDINGS plans to consider increasing the issuance amount to a maximum of 200 billion won.
The company plans to use the funds raised from this corporate bond issuance primarily to repay debt. Specifically, the proceeds will be used to repay 140 billion won in corporate bonds maturing at the end of November. If the issuance amount is increased, the funds will also be used for working capital and as potential support funds for affiliates.
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