Hanwha Aerospace, which embarked on its first corporate bond issuance of the new year, has successfully secured orders surpassing seven times the fundraising amount. This achievement comes as institutional investors resume capital deployment, benefiting from the “New Year effect.”
According to sources in the investment banking (IB) industry on Jan. 3, Hanwha Aerospace, with a credit rating of “AA-,” received purchase orders totaling 1.42 trillion won (US$1.08 billion) in its 200 billion won corporate bond demand forecast on the same day. The two-year maturity received orders worth 280 billion won for the 60 billion won issuance, the three-year maturity garnered 1.04 trillion won for the 80 billion won issuance, and the five-year maturity attracted orders worth 100 billion won for the 60 billion won issuance.
Hanwha Aerospace presented desired interest rate rages, adding a spread of -30 to +30 basis points, with 1 basis point equal to 0.01 percent, to individual reference rates. These rates represent the unique interest rates evaluated by private bond rating agencies. For the two-year maturity, the subscription amount was filled at -7 basis points, for the three-year maturity at -8 basis points, and for the five-year maturity at -2 basis points. Hanwha Aerospace issued corporate bonds with an annual interest rate of 4.344 percent for a three-year term in April of last year. Within just nine months the company successfully lowered the fundraising interest rate by nearly 30 basis points.
Hanwha Aerospace’s issuance of public bonds is intended for the redemption of 260 billion won worth of bonds set to mature in April of this year. The company is currently reviewing the possibility of increasing the issuance amount to a maximum of 400 billion won on Jan. 11 thanks to the successful demand predictions.
The success in demand predictions for Hanwha Aerospace is attributed to the growing anticipation of the end of the tightening policy in the United States this year. It is explained that this coincided with the
“New Year effect,” wherein institutions release funds at the beginning of the year.