Korea Export-Import bank to sell 10-year euro notes; European roadshow starts Thursday

By Paul Deckelman

New York, Feb. 2 - The Export-Import Bank of Korea (Kexim) disclosed plans Friday to sell 10-year euro-denominated notes, with the issue expected to come to market around mid-month.

The bank did not specify the amount of notes to be sold, although it is expected to be a benchmark-sized deal of about $1 billion equivalent under Kexim's existing $4 billion shelf registration program.

A syndicate source said the deal would be pitched to investors in Europe via a short roadshow slated to run from Thursday through Feb. 12 on the Continent, including presentations in Amsterdam and Helsinki on Thursday, in Luxembourg and Copenhagen on Feb. 9 and in Paris and Frankfurt on Feb. 12.

Pricing would be expected to take place soon after the roadshow, subject to market conditions; Kexim reportedly hopes to get the deal done before the Chinese New Year on Feb. 18, which traditionally throws a year-end holiday lull over the Asian financial markets.

Although the deal is likely to be structured as a single tranche of fixed-rate senior global notes, one published report said the option of launching a second tranche of floating-rate notes has not been discounted.

Kexim named Citigroup, DePfa Bank plc, Deutsche Bank, Merrill Lynch & Co. and UBS Investment Bank as its joint lead managers and bookrunners for the deal. Dublin-based DePfa, generally less well-known than the other four institutional giants, is a leading financial services provider to public-sector authorities worldwide and is considered a large player in the Korean debt market.

The notes will be non-callable.

They will be issued in minimum denominations of €50,000 principal amount and integral multiples of €1,000 in excess thereof.

The government-owned bank - which acts as South Korea's official export credit agency - outlined its plans for the upcoming bond sale in a 424B supplementary filing with the Securities and Exchange Commission.

It said it plans to use the net proceeds from the sale of the notes for its general operations, including repayment of maturing debt and other obligations. A published report cited the bank's director-general for international finance as saying that the new-deal proceeds would be swapped into dollars and then used to repay maturing debt and to finance new loans.

On Thursday, Standard & Poor's assigned the prospective deal an A rating, with a stable outlook. It said that its ratings for Kexim debt "incorporate strong direct support from the government, including capital injections and the provisions of loans." This was partially offset by "its low profitability, although the bank has never recorded a loss."

Moody's Investors Service on Thursday assigned the issue an Aa3 rating, with a stable outlook, citing its "high level of government support."

Fitch Ratings on Thursday assigned an A+ rating to the issue.

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