[Edaily Marketin Reporter LEE GEON-EOM ]POSCO FUTURE M(003670)The company secured orders amounting to 4.5 times the target offering amount during its corporate bond bookbuilding and set interest rates for both the 2-year and 3-year bonds below the respective market average rates. Unlike earlier this year, when the company issued bonds at rates above the market average despite receiving large orders, analysts say it achieved success this time around in terms of issuance rates as well.

Market observers are increasingly attributing the strong institutional demand to a rebound in first-half earnings and the potential for support from the POSCO Group. On the 28th of last month, Korea Ratings Corporation maintained POSCO FUTURE M’s credit rating at AA- (Stable).

According to the financial investment industry on the 4th, POSCO FUTURE M received a total of 450 billion won in orders during the bookbuilding process for the issuance of 100 billion won in unsecured bonds. By maturity, the 2-year tranche, which aimed to raise 40 billion won, received 240 billion won in orders, while the 3-year tranche, which aimed to raise 60 billion won, received 210 billion won. The subscription ratio for the 2-year tranche was 6 times, significantly exceeding that of the 3-year tranche (3.5 times).

Interest rates were also set low. POSCO FUTURE M proposed a target yield band of ±30 basis points (1 bp = 0.01 percentage point) relative to the arithmetic mean of individual market average yields. According to the book-building results, the 2-year bond was priced at -10 basis points relative to the individual market average yield, while the 3-year bond was priced at -4 basis points, both reaching their target issuance amounts. Both the 2-year and 3-year bonds secured so-called “under” yields—rates lower than the market average.

This outcome differed from the issuance earlier this year. In January, POSCO FUTURE M received 630 billion won in orders for a 250 billion won offering and increased the issuance size to 450 billion won. At that time, the yields on the 3-year and 5-year green bonds were set at 3.57% and 3.88%, respectively—slightly above the market average. This suggests that, despite benefiting from the “early-year effect”—when institutional investors are actively deploying funds—the company was unable to gain an advantage in terms of interest rates.

Based on the results of the bookbuilding process, POSCO FUTURE M plans to consider increasing the issuance amount by up to 200 billion won. The funds raised will be used to repay bank loans due at the end of this month.