KBank has announced its successful issuance of USD denominated subordinated notes (the “Notes”) with a USD800 million offering that were oversubscribed four times. Such high oversubscription rate reflects the international investors’ confidence in KBank. It is the largest South-East Asia Reg-S-Only Tier-2 note issue in more than five years, and also the first USD-denominated 12NC7 Basel-III Tier-2 tenor from Asia (excluding Japan) in nine years.
Mr. Predee Daochai, KBank President, said that KBank issued USD denominated subordinated notes worth 800 million USD with a 12-year tenor which will be due in 2031 and can be called in their 7-years (12NC7), offering at a fixed rate of 3.343 percent per annum. The objective of the issuance of the Notes which can be counted as KBank’s Tier 2 capital is to support KBank’s foreign operations. KBank also aims to strengthen funding position for suitable long-term funding cost.
The Notes were issued through KBank’s Hong Kong branch on October 2, 2019 and were rated Baa3 by Moody’s, and BBB by Fitch Ratings, and were listed on SGX. The notes were offered to institutional investors and they were fully subscribed quickly. Of the total investors, 81 percent were in Asia and 19 percent were in Europe. Given the rarity of a Thai bank issuance, the Notes were deliverable to high quality investors with 80 percent being taken up by funds/asset management companies, with pensions/insurers and sovereign wealth funds buying up to 8 percent. Bank treasuries accounted for 3 percent of the orderbook, with the remaining 9 percent being taken up by other institution types. BNP Paribas, Citigroup, and Standard Chartered Bank acted as joint book-runners and joint lead managers.
The issuance of KBank subordinated notes succeeds in several aspects. For example, the total books reached USD3.5 billion, representing 4.4 times of the value of the subordinated notes offered by KBank. Such high oversubscription rate reflects the international investors’ confidence in KBank and the Thai economy. This is because it is the largest South-East Asia Reg-S-Only Tier-2 note issue in more than 5 years and longest dated Basel III Tier 2 in Reg S Only format from Asia (excluding Japan).
Moreover, the Notes have the lowest coupon as well as spread for a South-East Asia Tier-2 note issue in more than two years. The issuance is also the first USD-denominated 12NC7 Basel-III Tier-2 tenor from Asia (excluding Japan) in 9 years and the first ever 12NC7 from Thailand.