Hajin Group has failed to attract enough buyers for its third public offering of bonds for this year.
The group became the first non-financial conglomerate in Korea to suffer under-subscription in bold offering this year.
The group planned to raise 100 billion won (US$84.75 million) through the latest bond offering. But subscriptions totaled 61 billion won (US$51.69 million), according to investment banking (IB) industry sources on July 17. Orders for 3-year bonds reached 26 billion won (US$22.03 million) while those for 5-year bonds came to 35 billion won (US$29.66 million). The credit rating for Hanjin bonds is BBB+, which is considered a subprime bond.
Hanjin succeeded in issuing corporate bonds in the last two issuances. The under-subscription is attributed to the supply and demand situation in the corporate bond market rather than to the problems of the Hanjin Group itself.
An official from an IB firm said, “Demand for most BBB-rated corporate bonds come from retail investors. But, subprime bonds are losing its charm as interest rates have been falling steeply these days.”