LG Electronics drew more than 2 trillion won in orders during a demand forecast for its corporate bond issuance, marking a successful sale.
According to investment banking sources Monday, LG Electronics received 2.25 trillion won in valid orders against a 250 billion won offering during the demand forecast conducted the same day. Specifically, the two-year tranche drew 1.17 trillion won against a 150 billion won offering, while the five-year tranche attracted 750 billion won against 50 billion won. The 10-year tranche received 330 billion won in orders against a 50 billion won offering. LG Electronics is reportedly considering increasing the issuance to as much as 500 billion won.
The company is expected to lower its funding costs after achieving "under-benchmark" pricing across all maturity tranches. Based on a band of minus 30 to plus 30 basis points (1 bp = 0.01 percentage point) added to the privately assessed benchmark yield (a company's individual yield set by private bond rating firms), the two-year tranche met its target at minus 9 bp and the five-year tranche at minus 10 bp. The 10-year tranche filled its target at minus 30 bp, the lower end of the pricing band.
LG Electronics plans to use the proceeds from the issuance to repay debt. The bond sale was managed by NH Investment & Securities, KB Securities, Korea Investment & Securities, Mirae Asset Securities, iM Securities and Shinhan Securities. LG Electronics' corporate bond credit rating is AA, classified as high-grade.
