Korea National Oil Corp. (KNOC) has raised 1 trillion won (US$894.21 million) of funds in the global market in a month.
According to the investment banking (IB) industry sources on July 2, KNOC issued 500 million Swiss franc (US$502.67 million or 561.98 billion won) worth of bonds in the middle of May and US$400 million (447.32 billion won) worth of Formosa bonds at the end of June. A Formosa bond is a bond issued in Taiwan by foreign companies or institutions but denominated in a currency other than the New Taiwan Dollar. KNOC issued Formosa bonds for the first time since its establishment.
KNOC issued five-year Formosa bonds which mature on July 16, 2023. The bond’s coupon rates are three months LIBOR plus 87.5 basis points. One basis point is equal to 0.01 percent. KNOC is planning to use the funds raised by the issuance of the bonds to pay back its debts. Three institutions, including Credit Agricole (CACIB), managed the issuance of the bonds.
KNOC had about 9.7 trillion won (US$8.65 billion) of debts as the end of last year, while its subsidiaries had 700 billion won (US$623.83 million) of collateralized loans and 2.8 trillion won (US$2.5 billion) of unsecured loans.
The company’s debt ratio surpasses 600 percent, which is too high, but international credit rating agency Moody's assigned KNOC an Aa2 rating with a stable outlook. This is because Moody’s decided to assign the same level with the South Korean government considering the fact that it is a state-run company. Standard & Poor's also rated AA (stable) for KNOC, which is the same with the sovereign credit rating.