DCM week: Largest ever Korean issue in the domestic market

With more financial market turbulence last week, thanks to China's decision to devalue the yuan over three days, domestic corporate bond market issuance activity was light. The highlight of the week was a A$650 million 5.5 year issue from Export-Import Bank of Korea (rated A+), the largest issue yet in the domestic market from a Korean borrower.

The two-tranche issue ($350 million floating rate and $300 million fixed rate) was priced at 120 basis points over the bank bill swap rate.

However, the bank has form in this respect, with two $500 million raisings in May and November last year, and the sale of $500 million of bonds in a single tranche in July 2012.

Bendigo and Adelaide Bank (rated A-) was the next largest issuer, selling $600 million of five year FRNs at a spread of 110 bps over bank bills.

QIC Shopping Centre Fund (rated A-) and Suncorp also favoured February maturities for their bond issues. QIC sold $200 million of 5.5 year bonds priced at 135 bps over swap, and Suncorp sold $200 million of 18 month FRNs priced at 52 bps over bank bills.

At the start of the week Suncorp also sold $100 million of one-year FRNs priced at 45 bps over bank bills.

The sovereign, supranational and agency sector was represented last week by Corporacion Andina de Fomento (rated AA-), Kommuninvest (rated AAA) and the Province of Manitoba (rated AA).

CAF added $50 million to its June 2025 line, taking the total outstanding to $275 million. Kommuninvest added $25 million to its October 2025 line to take the size of the line to A$125 million, and Province of Manitoba's March 2025 line now totals $300 million, after a $50 million tap. The increases were priced at margins of 160.5 bps, 75bps and 66.5bps over commonwealth government securities respectively.

Offshore, Macquarie Bank (rated A) sold US$55 million of three-year FRNs in the US s144A market. The notes were priced at 70 bps over Libor.

Macquarie Bank also sold CNY100 million (A$21.6 million) of three year bonds in the Dim Sum market. The bonds will yield 4.2 per cent.