Paradise Co., a leading hotel and casino operator in South Korea, called off its first-ever bond sale worth 100 billion won ($85.1 million) on the book building day amid rising concerns over tepid demand following a recent sharp rise in yields.

The company announced in a statement on Tuesday that it has decided to postpone the issuance of its three-year bonds “due to increased volatility in the financial market at home and abroad.”

Paradise last week submitted a required document to financial authorities to sell 100 billion won worth of three-year bonds, but with a big jump in borrowing rates ahead of its scheduled book building session, it was in a quandary of whether or not to push forward with the sale.

On the planned book building day, the company surprised investors by announcing its decision to call off the debt sale and decide to wait and see until market conditions improve. It is rare for blue chip companies like Paradise with a credit rating of AA- to cancel bond issuance on the day of its arranged book building session.

Shares of Paradise rose 0.37 percent or 50 won from the previous session to end at 13,450 won on Tuesday.

An unnamed official from the investment bank industry suspected that the company has made such a decision to avoid any adverse effect in case it fails to raise enough funds from the its first-ever debt sale since inception at a time when the fund raising environment has deteriorated.

Initially, Paradise expected to secure funds at a 1.7 percent borrowing rate. But with the recent big rise in the yield driven by the prospect of expansive fiscal and economic policy by the new U.S. administration next year, the borrowing rate has jumped more than 50 basis points to hover between 2.2 and 2.3 percent. Yields rise when bond prices fall.

Paradise had planned to use the proceeds from the bond sale in increasing the capital of its subsidiary Paradise Segasammy Co. that manages casino business in Yeongjong Island in Incheon, Gyeonggi. The change in plan, however, would not affect Paradise financially as it has until the first half of next year to refinance funds, it said.

By Park Yoon-gyu and Chun Gyung-woon

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