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Mirae Asset Securities Issues $600 Million in Foreign Currency Bonds, First for a Korean Brokerage in 2024

Oversubscribed by 10 Times, Mirae Asset's Bonds Reflect Strong Investor Confidence Amid Regulatory Challenges
South Korea
m 006800.KO Mid and Small Cap 2000
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In a notable development in the financial sector, Mirae Asset Securities Co. has successfully issued $600 million worth of foreign currency bonds. This transaction marks the first foreign bond sale by a South Korean brokerage firm this year, a move that reflects the growing confidence in the sector despite regulatory challenges. The bond offering, comprising notes with three- and five-year maturities, was met with overwhelming investor interest, attracting bids nearly $7 billion, over 10 times the amount offered.

These bonds were sold at rates notably lower than the initial price guidance, which has eased market concerns regarding Korean brokerage firms’ exposure to liquidity-strapped construction companies. The success of this bond issue comes amidst domestic securities firms facing increased scrutiny from regulators over the potential misselling of high-risk financial products.

The three-year bonds were issued at a rate of 222 basis points above the corresponding US Treasury yield, while the five-year notes were set at 200 basis points above. These bonds received a triple B rating, indicating a solid investment grade. Mirae Asset had initially proposed a spread of 235 and 260 basis points for the three- and five-year bonds, respectively.

This bond issuance has garnered significant attention from global investors, particularly at a time when Chinese issuers have reduced their bond sales. The prospect of US interest rate cuts this year has further fueled investor interest in Korean bonds.

Citigroup Global Markets, Credit Agricole, HSBC, and Mirae Asset’s Singapore subsidiary were the underwriters of this issuance. Mirae Asset, which first entered the dollar bond market in 2018, has consistently raised about $500 million annually in foreign bonds, with the exception of 2022.

Furthermore, other South Korean companies have also been active in foreign bond offerings this January, with significant issuances from Export-Import Bank of Korea, SK Hynix, Hanwha Total Energies Petrochemical, POSCO Holdings, and Woori Bank. Additionally, Korea Electric Power Corp, Shinhan Bank, Shinhan Card, and Hyundai Card are gearing up to issue foreign currency bonds in the coming months, signifying a robust trend in the Korean bond market.

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