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(Bloomberg) -- Korean Air Lines Co. priced Samurai bonds with less of a yield premium than similar yen notes, helped by a guarantee from a state-backed lender even as the nation is hit by a political crisis.
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The Seoul-based carrier sold ¥30 billion ($193 million) of three-year bonds on Friday at 40 basis points over mid-swaps, according to people with knowledge of the matter. That’s less than the average of 65 basis points for Samurai bonds with similar tenors sold since the start of 2024, including 58 basis points for French bank BPCE SA, according to Bloomberg-compiled data covering bonds that list the spread at issue.
The airline’s yen bonds are guaranteed by the Export-Import Bank of Korea, giving the debt the same ratings as the government-backed lender that are among the highest debt scores, Bloomberg-compiled data show. The company last issued Samurai notes in 2023 at a 65 basis-point spread, according to Mizuho Securities Co., one of the underwriters of the latest yen deal. Export-Import Bank of Korea’s own sale of three-year Samurai bonds in November had a spread of 15 basis points.
South Korea’s government-bond insurance costs jumped and stocks dropped after President Yoon Suk Yeol briefly declared martial law early in December, a move seen threatening the country’s democratic foundations. Some investors were concerned about the political turmoil and refrained from buying the debt, but orders for Korean Air’s bonds still exceeded supply at just shy of ¥50 billion, according to Mizuho.
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