South Korea`s state-run Korea Gas Corp. (KOGAS) has succeeded in selling its five- and 10-year dollar-denominated bonds at the country`s cheapest borrowing cost as foreign investors’ appetite for Korean notes remains insatiable following an upgrade in the country’s sovereign credit rating by a series of credit rating agencies last year.

According to industry sources on Tuesday, the gas monopoly attracted 240 institutional investors in New York, Hong Kong and Singapore for a total of its $900 million worth global bonds. Demands from the institutional investors totaled $4 billion.

The company’s bond sale advisers are UBS, JPMorgan and Credit Suisse, and Asian and American insurers and asset managers participated in the latest book building session. The competition rate surged to 4.4 to 1, sending the bond coupon rate to much lower than expected.

In particular, the yield on the company’s 10-year bond was set at 2.325 percent a year, the lowest level ever among global bonds issued by Korean companies. The spread of the bond against U.S. Treasuries was 90 basis points, the lowest level among non-banking organizations. The five-year yield on the company’s bond was also set at a relatively low level of 1.92 percent a year.

The favorable borrowing costs suggest bonds issued by Korean blue-chip public corporations remain popular in the global market as investors are looking for haven assets amid lingering uncertainty after the U.K.’s decision to exit the European Union (EU). Global bonds issued by other Korean companies are also preferred by overseas investors after the country’s sovereign credit rating was upgraded by a series of foreign credit rating agencies last year, an unnamed international finance expert said, adding the yield on Korean notes are more attractive than those on its peers issued by companies in Japan and Europe with negative interest rates.

Kia Motors Corp. drew $12 billion demand for its $700 million global bonds in April, 17 times higher than its sale target, while the Export-Import Bank of Korea (Korea Eximbank) attracted $5.2 billion for its $2.5 billion bonds from more than 300 investors in May.

To take advantage of the favorable market conditions, Korea Western Power Co. and KT Corp. are planning to sell global bonds. Korea Western Power confirmed better than expected market responses during a road show last month, and KT is testing the waters in the market to sell $500 million bonds.

By Cho Si-young, Kim Hye-soon, Kim Hyo-hye

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