이 기사는 2022년 02월 23일 07:44 thebell 에 표출된 기사입니다.

Lotte Chemical attracted bids worth 720 billion won ($600 million) in the bookbuilding process for its first bond issuance of this year to raise 300 billion won, but its 10-year bond was undersubscribed.

Lotte Chemical launched its bookbuilding session on Monday to issue 300 billion won in bonds. The offering included 150 billion won of 3-year bonds, 70 billion won of 5-year bonds and 80 billion won of 10-year bonds. KB Securities, NH Investment & Securities, Korea Investment & Securities and Samsung Securities managed the process.

Market insiders widely expected that the company will smoothly issue 300 billion won in bonds thanks to its AA+ rating.

Lotte Chemical and sale managers increased the proportion of 10-year bonds – which have relatively tight spread between its average yield and a yield of other bonds with the same credit rating and maturity. Aggressive sales activities have been carried out by insurance companies that prefer longer-term bonds.

“Unlike 3-year and 5-year bonds, (the company’s) 10-year bonds have an average yield that is 20 basis points below an average yield for AA+ issuers,” an industry source said.

The offering attracted bids worth 720 billion won, more than two times oversubscribed, during the bookbuilding process. The 3-year bond attracted bids worth 540 billion won, four times its offering, and set a yield at 18bps above the average yield. The 5-year bond attracted 110 billion won in bids and is priced at a yield ranging from 25bps to 30bps above the average yield.

The 10-year bond, however, ended up garnering bids worth 70 billion won, 10 billion won less than its offering. The 10-year bonds drew only 50 billion won in bids at proposed yields ranging from -20 to +20bps. The spread may rise to +30bps if the company sells the bond worth 70 billion won.

Sale managers plan to sell out the entire 80 billion won 10-year bond by receiving additional subscriptions until the end of this month.

Lotte Chemical’s 3-year bond will likely be sold at a yield of 3.0%, the 5-year bond at 3.15% and the 10-year bond at 3.38% respectively.

The company plans to use the proceeds from the bond sale to refinance corporate bonds worth 380 billion won that will mature between April and October. (Reporting by Cheol Kang)