The Largest Bond Issuance by a Korean Company
SK Hynix will issue US$2.5 billion worth of global bonds, the largest bond sale for a Korean company. Global bonds refer to bonds that are issued simultaneously in major global financial markets such as the United States, Europe, and Asia.
Analysts say that SK Hynix garnered attention from foreign investors with its solid performance and acquisition of the NAND flash business from Intel.
Purchase orders totaled US$12.3 billion (about 13.5 trillion won) in a demand forecast (pre-subscription) made by SK Hynix for overseas institutional investors on Jan. 13. Of the total, U.S. institutional investors accounted for 43 percent, while the rest came from Asia (34 percent) and Europe, the Middle East and Africa (16 percent).
Purchase orders amounted to US$2.8 billion for US$500 million three-year bonds, US$4.1 billion for US$1 billion five-year bonds, and US$5.4 billion for US$1 billion 10-year green bonds.
A green bond is a type of bond with a special purpose, limited to use only to fund environmentally friendly projects. Among global semiconductor memory manufacturers, SK Hynix is the first company to issue a green bond.
The lead managers were the Bank of America (BoA), Citigroup Global Market Securities, Credit Agricole, Credit Suisse, BNP Paribas, HSBC and JP Morgan.
SK Hynix could sell a record amount of bonds thanks to its popularity in the global bond markets. The previous record was US$1.56 billion set by LG Chem in 2019.
SK Hynix could raise funds at lower-than-expected costs due to strong demand for its bonds. The global bonds will be issued below desired interest rates. The three-year bonds offer an interest rate of 1.06 percent per year, the five-year bonds 1.52 percent per year, and the 10-year green bonds 2.49 percent per year. Global credit rating agency Moody's Investors Service has assigned "Baa2," the ninth of its 10 investment grade ratings, to SK Hynix while Standard & Poor's (S&P) has assigned "BBB-," the tenth. The company plans to use the funds to invest in environmental facilities and repay borrowings.