South Korea toasted the new year with Asia's first sovereign bond, pricing the $1 billion, 10-year issue well below the initially indicated yield as global investors rushed to buy. The bonds, priced to yield 55 basis points above US Treasuries, quoted as low as 47.5/46 bps in secondary markets as investors lapped up bonds from an issuer that has not sold dollar-denominated debt since 2014.
Bank of America Merrill Lynch, Citigroup, Goldman Sachs, HSBC, J. P Morgan, The Korea Development Bank and Samsung Securities were bookrunners.
South Korea's finance ministry said about 70 institutional investors across Asia, Europe and the United States took part in the deal, submitting orders for three times the $1 billion on offer.
"This was an important exercise given the headlines they have had onshore," said a source close to the deal, adding that given South Korea's sound financial position, raising funds was not the main driver behind the transaction.
"(South Korea) chose to enter international markets for bigger-picture reasons - building a reputation as an investment destination, reinforcing its strength as a credit, and setting a benchmark for other (Korean) issuers."
The country is currently facing uncertainty from an influence-peddling scandal that has seen President Park Geun-hye impeached by parliament and on the brink of becoming the country's first democratically-elected president to be forced from office.
The economy has slowed as handset exports lagged more than expected after Samsung Electronics Co Ltd had to scrap its fire-prone Galaxy Note 7.
The 2.75 percent bonds due 2017 were sold at 98.955 cents on the dollar to yield 2.871 percent, according to a term sheet seen by Reuters.
South Korea had earlier indicated a price guidance of 70-75 bps above US Treasuries.
This was South Korea's first dollar bond since June 2014 when it issued $1 billion of 30-year bonds at 4.143 percent.