Friday, 16 January 2009

Korea Development Bank Pricing Talk (Update)

The sale of $2 billion in five-year bonds by the KDB might be priced to yield 6.75 percentage points above Treasury yields of equivalent maturity. Books likely will be closed shortly.

Issuer: The Korea Development Bank (KDB)
Expected Ratings: Aa3 / A / A+ (Negative/Negative/Negative)
Format: Senior Fixed Rate Global Notes
Maturity: Five Years
Size: $2 Billion (Upped from at Least $500 million)
Price Guidance: Tsy + 675 bps
Managers: BNP Paribas SA / Deutsche Bank AG / HSBC Holdings Plc. / Merrill Lynch & Co. / Royal Bank of Scotland Plc.

Check the COC (change of control) terms for this issue -- in the event of any decrease in the Korean government´s stake and a deterioration in ratings, there will be a 100 percent put.

The old times are gone -- tougher conditions are on the table even for borrowers with good credit quality. But the truth is, a source told us, that there are concerns regarding the possible sale of KDB. The source tell us that the problem is that the proceeds from any sale aren't used to prop up capital but funneled toward other purposes. South Korea had announce plans to sell the bank last year but the credit crisis and a political standoff have both put it at a standstill.

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