SK Telecom announced on April 10 that the company successfully issued USD 500 million (KRW 533 billion) worth of five-year offshore private loans at a coupon rate of 3.75 percent. The latest feat is likely help the company secure enough capital in time for shaky world economy and brace for future interest rate hikes.
The recent US-China trade war has taken its toll on global financial market, pushing interest rates higher. Despite this grim backdrop, SK Telecom has managed to draw positive response from global investors and successfully issued loans, thanks mainly to its high credit rating, promising growth potential, and stable cash flow.
For the loan issuance, SK Telecom held financial roadshows across the world including the U.S., Europe, and Asia and received favorable responses from some 60-global bond investors whom the company met in person.
In the end, about seven times larger loan subscription (worth USD 3.3bln) than the company’s estimated bond issuance (USD 500mln) was made during its loan subscription process. And the final interest rate was set at a point 22.5bp(1bp=0.01percent) lower than the initially proposed level. The amount was the largest ever drawn by any South Korean companies this year during their offshore loan subscription processes.
“The company will use lately issued loans to pay back its preexisting loans,” SK Telecom said in a statement. “Diversifying the loan maturity structure is expected to improve the company’s financial structure.”