Overseas Financing
KT announced that it succeeded in issuing foreign bonds worth US$1 billion through bidding on April 14 and 15.
The company stressed that the amount of US$1 billion is the largest ever in the domestic corporate sector since the recent financial crisis, and the success reflects the foreign bond market participants’ trust in itself. A total of 163 organizations joined the tender, and the total bidding amount was US$4 billion.
KT has had a hard time issuing corporate bonds in Korea due to its revised report of business losses for 2013 earlier this year, and the exposure of the 300 billion won (US$289 million) fraud case in which KT ENS is involved. The telecoms operator, under the circumstances, turned its eyes to overseas markets, and is expecting that the successful issuance at this time will contribute to its financial structure in the long term.
KT quoted Moody’s as saying, “The foreign bond issue of KT will improve its loan expiration situation and have a positive effect on its credit rating. The company’s margin will show some signs of getting better for a couple of years to come, as it is striving for cost reductions by means of early retirement and the like.”
The three-year bonds have a coupon rate of 1.75 percent, one percentage point higher than the U.S. Treasury Bond rate, and five-year bonds are at 1.85 percent, 1.1 percentage points higher than the rate of a five-year U.S. Treasury Bond. 65 percent of the bonds expire in three yeas, and the rest expire in five.
The bonds are scheduled to be issued on April 22 (U.S. time). KT is planning to spend 60 percent of the sum to refinance the foreign bonds maturing in June, while employing the rest for general management purposes.