Issuance of Global Corporate Bonds
South Korea’s leading mobile carrier SK Telecom Co. successfully raised US$500 million (532 billion won) in five-year global bonds. It was the highest amount for foreign currency corporate bonds issued by Korean companies considering the volume of orders by foreign organizations.
The company announced on April 10 that it secured US$500 million (532 billion won) in five-year global bonds at a coupon yield of 3.75 percent and its US$500 million (532 billion won) worth of bond offering invited overwhelming demand of more than US$3.3 billion (3.51 trillion won) from foreign organizations during its book-building session. The figure was seven times higher than the original amount of bonds to be issued and its yield was finalized at 3.525 percent, which was 22.5 basis points lower than its original pricing yield.
SK Telecom will use over 500 billion won (US$469.31 million) of the proceeds from the latest debt sale to repay its debts as well as to buy ADT CAPS Co. when it firms up its plans for the acquisition. An official from the investment banking (IB) industry said, “SK Telecom will raise money to purchase ADT Caps by reducing acceptance financing and issuing corporate bonds.”
SK Telecom decided to preemptively issue its corporate bonds in anticipation of the hike in key interest rates in the future. SK Telecom said, “Despite market jitters caused by the global trade frictions and monetary tightening trend, the company could win the hearts of investors during its global bond sale thanks to its high global creditworthiness, strong growth potential and stable cash flow.” SK Telecom held an investment briefing session in North America, Europe and Asia in March to issue the bonds.
According to the world's biggest credit ratings agency Standard and Poors (S&P), SK Telecom’s unsubordinated and unsecured bonds in US dollars has A- of the credit rating. S&P said, “SK Telecom has a low rate of loans so unsubordinated and unsecured creditors don’t have disadvantages compared to other creditors. However, the company’s financial indicators can weaken for one to two years when it raises money to acquire ADT Caps through a loan.”