Borrowers at South Korean banks flock to syndicated loans. The major cause is because the central bank tightens and puts higher pricing especially in the offshore bond market. Kookmin Bank and Keb Hana Bank, two giant banks in the country, raised $1.4bn of syndicated loans. This is actually a rare opportunity for Aisn loan participants for exposure booking. Meanwhile, in the past few years, South Korean financial institutions only transacted bilateral loans.
The financial situation has been really tough recently and globally. Both Kookmin Bank and Keb Hana Bank might find it challenging in the loan market and international bond market. In this case, the rise of the U.S. Treasury yields have increased the cost of issuance in the U.S. dollar bond market as well. The problem is the loan pricing is yet to adjust. In addition, the U.S. The Federal Reserve has increased its target range for federal funds by 75bp. This is the highest increase since 1994, said IFR Asia.
A Hong Kong-based loan banker at a global bank argued that this rising cost of funds for banks and bonds pricing could trigger the Korean banks. The Korean banks, according to the banker, would raise the loans. He said that it is completely fine for the Korean banks to enter the loan market. This is because they expect to keep options open. A deal like this does make sense for them since there is a pricing benefit.
Kookmin seeks a $800m five year loan paying a top-level all-in pricing of 95bp. It is via an interest margin of 94bp with three month SOFR. Keb Hana bank on the other hand, is looking for $600m financing comprising tenors from three to five years. The top-level, all-ins are 75bp and 95bp.
