Over-subscription
In the demand forecast for Hyundai Special Steel’s corporate bonds, more than six times the amount was oversubscribed.
Korea Investment & Securities announced that there had been a run on the investment demands of 500 billion won (US$448.11 million) in Hyundai Special Steel’s corporate bond demand forecasting worth only 80 billion won (US$71.7 million), which was conducted on March 19.
The competition rate is the highest in that level, after the rules on standard demand forecasts were revised in Sept. 2013.
The organizer of the demand forecast is Korea Investment & Securities. By maturity, 320 billion won (US$286.79 million) was raised in three-year maturities, while 180 billion won (US$161.32 million) was raised in five-year maturities within the suggested rate band. In the case of three-year bonds, it decided to increase to 40 billion won (US$35.85 million).
The reason why so many investors were interested in corporate bonds is that they could not find investment in the era of the low standard interest of 1 percent.
Moreover, as Hyundai Special Steel has been incorporated into Hyundai Motor Group, its credit rating has increased from BBB to A-.
An official from Korea Investment & Securities said, “As the Monetary Policy Committee lowered standard interest in March, the interest rate of treasury bonds recorded the lowest. Accordingly, the corporate bonds of individual companies ranked A- to A+, which have absolute interest, are becoming more popular.”