Lotte Construction has launched a demand forecast for public corporate bonds, but all of them went unsold. They aimed to attract investors with interest rates in the 5% range, but concerns over credit rating downgrades were deemed to have a greater impact.
According to the investment banking (IB) sector on the 23rd, Lotte Construction (credit rating A) did not receive a single purchase order in the demand forecast for 110 billion won.
Lotte Construction presented a hoped-for interest rate band of 5.4% to 5.7% for one-year bonds and 5.6% to 5.9% for 1.5-year bonds. Although this suggested a high-interest rate compared to the 3% range for two-year issues from A-rated corporations, it failed to win over investors.
This Lotte Construction corporate bond will be issued on the 30th, with underwriting and purchasing by KB Securities, NH Investment & Securities, Korea Investment & Securities, Kiwoom Securities, iM Securities, DAISHIN SECURITIES, and Mirae Asset Securities. Subsequently, each securities company is expected to sell to institutional and retail investors.
Lotte Construction plans to use this corporate bond to refinance short-term debts such as convertible bonds and commercial papers (CP). It is facing the maturity of the 165 billion won private bond this month.
Recently, Korea Credit Rating downgraded Lotte Construction's credit rating from the previous 'A+/negative' to 'A/stable'. The ratings for commercial papers and short-term bonds were also downgraded from 'A2+' to 'A2', due to the ongoing burden of contingent liabilities including project financing (PF).