The transaction came just two weeks after South Korea elected a new president, and as ousted president Park Geun-hye goes on trial. Meanwhile, North Korea has been conducting more missile tests.
Against that backdrop, Kexim’s foray into Europe needed to be a “conspicuous success", said a head of syndicate on the deal. The issuer eyed around $500m and was able to push for a larger size.
“They wanted to get a good deal done, not just a sizable one,” he said.
Luckily, conditions in Europe were favourable for Kexim . Emmanuel Macron secured the French presidency two weeks ago, defeating anti-eurozone candidate Marine Le Pen, creating more stability in Europe.
“ Kexim had prepared accordingly in advance to capture this advantageous window, and also as a frequent issuer, was quick enough to act in a swift manner,” the issuer said in a press release on Tuesday.
Investors, meanwhile, seemed to shrug off the political problems, and focused instead on questions about Kexim during a roadshow last week, said the head of syndicate .
“The election is much more of an equity story,” said the head of syndicate , explaining that the stock market is likely to see more changes with the new president Moon Jae-in in power than the debt market.
“Korea is a double-A credit,” he said. “It’s not going to make a difference to the country as an issuer .”
In addition, Aa2/AA/AA- Kexim is often seen as a leader among the country's borrowers, and its success will likely spur on more deals.
“Now that they’ve tapped the euro market, it’s natural to assume other Korean issuers will follow suit,” said the syndicate head.
Kexim’s €750m ($841m) deal was led by BNP Paribas, Goldman Sachs, HSBC, ING and Société Générale. Price guidance for the five year bullet was announced at mid-swaps plus 45bp area, and tightened to a final price of 40bp over. The notes tightened further in secondary markets and were trading at about 38bp over mid-swaps on Tuesday.
“ Kexim has tapped into a new investor base with this deal,” said the head of syndicate . “It’s been quite a while since a euro deal came from Korea.”
The last public euro transaction from a Korean name was in March 2016, when Kexim priced a €750m three year , according to Dealogic.
The order book for this week's senior Reg S deal stood at €830m across 83 accounts. Some 19% was allocated to Germany, 14% to France, 9% to the UK, 8% to Switzerland, 9% to Benelux, 11% to other Europe and 30% to Asia and elsewhere. About 36% was allocated to central banks, 31% to asset managers, 26% to other banks, 6% to insurers and pension funds and 1% to others.
Kexim added in its press release that its new notes will help reset its credit curve, given it has existing euro bonds maturing in 2019 and 2020.
“With the new five year euro issuance, Kexim now has a full euro two year , three year [and] five year curve,” it said.