KT&G successfully issued a $300 million eurobond (RegS) following bookbuilding conducted the previous day in Asian and European markets, the company announced on the 14th. This marks the tobacco and consumer goods company's second foreign currency bond issuance, building on its debut eurobond offering last year in April. The transaction attracted approximately $2.1 billion in orders, enabling KT&G to tighten pricing from an initial guidance of 95 basis points to a final spread of 65bp over equivalent-maturity US Treasuries. Strong investor demand reflected KT&G's substantial global market presence, with 37% of its consolidated revenue (approximately ₩2.4 trillion of ₩6.5 trillion) generated from overseas operations last year.
KT&G Tightens Spread to 65bp on Strong Bookbuilding Demand
KT&G priced a 3.5-year fixed-rate tranche at a spread of 65 basis points over equivalent-maturity US Treasuries. The company set initial price guidance at 95bp but tightened the spread by 30bp after receiving approximately $2.1 billion in orders during bookbuilding sessions in Asian and European markets. According to investment banking industry sources on the 14th, investor interest in KT&G remained robust despite concurrent bookbuilding by AA-rated issuers Korea Export-Import Bank and Korea Electric Power Corporation on the same day. Market participants noted that KT&G attracted particularly strong demand in Asian and European sessions, driven by scarcity value of corporate issuance, the yield premium available from an A-rated issuer, and the company's high recognition in overseas markets.
Overseas Revenue Accounts for 37% of Total Sales
KT&G's global market presence significantly influenced investor appetite for the bond. The company generated approximately ₩2.4 trillion from overseas markets last year, representing 37% of its ₩6.5 trillion consolidated revenue on a consolidated basis. This overseas revenue stream stems from KT&G's expansion across multiple business lines, including tobacco products and health functional foods. The company continues to diversify its business structure into real estate development, cosmetics, and pharmaceuticals.
Spread Narrows from 118bp Debut to Current 65bp Level
KT&G completed its inaugural eurobond bookbuilding in April last year, marking its first foreign currency bond issuance approximately one year and three months before this second transaction. The company priced its debut 3-year bond at a spread of 118bp over equivalent-maturity US Treasuries. The current 3.5-year issuance at 65bp represents a significant tightening despite the slightly longer maturity, positioning KT&G at a relatively low rate level among Korean A- rated issuers. Moody's assigns KT&G an A3 rating, while S&P rates the company A-. KT&G has expanded its use of domestic and international bond markets since 2023, when it began large-scale investments. The company issued its first public bond in the domestic market in 2023 before entering the eurobond market last year. This second issuance attracted a higher proportion of new investors compared to the debut transaction, broadening the company's foreign currency funding base. Citigroup Global Markets Securities, HSBC, and UBS served as bookrunners for the transaction.
FAQ
What size eurobond did KT&G issue on the 14th?
KT&G issued a $300 million eurobond (RegS) with a 3.5-year fixed-rate tranche at a spread of 65 basis points over equivalent-maturity US Treasuries.
How much of KT&G's revenue comes from overseas markets?
KT&G generated approximately ₩2.4 trillion from overseas markets last year, accounting for 37% of its ₩6.5 trillion consolidated revenue on a consolidated basis.
