POSCO’s new bond sale seven times oversubscribed

Other double A-rated South Korean companies seek to offer new bonds in January

POSCO's headquarters in Seoul
POSCO's headquarters in Seoul
Hyun-Ju Jang 2
2025-01-07 11:22:00 blacksea@hankyung.com
Debt financing

South Korean steelmaker POSCO’s new bond issue for 500 billion won ($343 million) was seven times oversubscribed, which may encourage the company rated AA+ to double its debt offering to 1 trillion won this month, according to investment banking sources.

The debt sale by the unit of POSCO Holdings Inc., drew a total of 3.4 trillion won in bookbuilding on Monday. The bonds' maturities range from two to seven years.

The following is the breakdown of POSCO's new bond issue.

Maturity Target amount (in Korean won)  Demand (in Korean won) 
2-year 100 billion 830 billion
3-year 250 billion  1,835 billion
5-year 100 billion  560 billion
7-year 50 billion  240 billion
(Source: Investment banking firms)

POSCO will repay foreign debts and invest in facilities with the proceeds.

FIRST KOREAN BOND SALE IN 2025

The strong interest in the country’s first corporate bond sale in 2025 reflected anticipation of additional interest rate cuts as investors looked to lock in the current yields.

It also defied political uncertainty in South Korea in the aftermath of President Yoon Suk Yeol’s impeachment after his botched martial law decree in December.

The sources said the stabilizing domestic bond market in the wake of the debt repayment by Lotte Chemical Corp., at the epicenter of the country’s debt market wobble late last year, revived interest in POSCO's new bonds.

A POSCO steel mill furnace
A POSCO steel mill furnace

Along with typically robust demand for new bonds at the beginning of a year, POSCO's new offering bodes well for other AA-rated Korean bond issues.

They include Hanwha Aerospace Co., food company Daesang Corp. and Mirae Asset Securities Co., as well as LG HelloVision Corp. and LG Uplus Corp. Hanwha and Daesang plan to raise 50 billion won and 20 billion won in new bond issues this month, respectively.

But other Korean companies rated below investment grade have yet to provide timetables for bond issues amid the domestic political turmoil.

Meanwhile, treasury bond yields are expected to remain steady with new supply.

South Korea plans to sell 197.6 trillion won in new bonds in 2025. The amount could increase if the government draws up a supplementary budget to prop up the slowing economy.

Write to Hyun-Ju Jang at blacksea@hankyung.com
 


Yeonhee Kim edited this article.
#POSCO #POSCOholdings #POSCObonds #bondissues #Koreanbonds #POSCObookbuilding #HanwhaAerospace #MiraeAssetSecurities #Daesang #LGHelloVision #LGUplus

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