South Korean steelmaker POSCO’s new bond issuance for 500 billion won ($343 million) was seven times oversubscribed, which may encourage the company rated AA+ to double its debt offering to 1 trillion won this month, according to investment banking sources.

The debt sale by the unit of POSCO Holdings Inc., drew a total of 3.4 trillion won in bookbuilding on Monday. Its maturities range from two to seven years.

The following is the breakdown of POSCO’s new bond issuance.

POSCO will repay foreign debts and invest in facilities with the proceeds.

FIRST KOREAN BOND SALE IN 2025

The strong interest in the country’s first corporate bond sale in 2025 reflected the anticipation for additional interest rate cuts as investors wanted to lock in the current yields.

It defied the political uncertainty in South Korea in the aftermath of President Yoon Suk Yeol’s impeachment after his botched martial law decree in December.

The sources said the stabilizing domestic bond market in the wake of the debt repayment by Lotte Chemical Corp., at the epicenter of the country’s debt market wobble late last year, revived interest in POSCO’s new bond.

Along with the typically robust demand for new bonds at the beginning of a year, POSCO’s new offering bodes well for other AA-rated Korean bond issuance.

They include Hanwha Aerospace Co., food company Daesang Corp. and Mirae Asset Securities Co., as well as LG HelloVision Corp. and LG Uplus Co. Hanwha and Daesang plans to raise 50 billion won and 20 billion won in new bonds this month, respectively.

But other Korean companies rated below the investment grade have yet to provide timetables for bond issues amid the political turmoil.

Meanwhile, treasury bond yields are expected to remain steady with new supply.

South Korea plans to sell 197.6 trillion won in new bonds in 2025. The amount could increase if the government draws up a supplementary budget to prop up the slowing economy.

Write to Hyun-Ju Jang at [email protected]
 

Yeonhee Kim edited this article.