SK On Upsizes Corporate Bond Issuance from 100 Billion Won to 144 Billion Won, Achieving Target Results

(Seoul=Yonhap Infomax) Hak Seong Kim = SK On Co., a leading South Korean battery manufacturer, has increased its public corporate bond issuance from the originally planned 100 billion won ($76 million) to 144 billion won ($109 million), reflecting robust investor demand.

This marks the company’s first major test in the capital markets following significant events such as a 2 trillion won ($1.5 billion) rights offering and its merger with SK Enmove, and is being viewed as a solid performance.

According to the Financial Supervisory Service’s electronic disclosure system on the 24th, SK On finalized the issuance of 104 billion won ($79 million) in two-year bonds and 40 billion won ($30 million) in three-year bonds on the 21st.

The initial filing had set both the two-year and three-year tranches at 60 billion won ($45 million) and 40 billion won ($30 million), respectively, but the amounts were increased after a successful book-building process. The demand forecast attracted bids totaling 104 billion won for the two-year notes and 40 billion won for the three-year notes.

The final coupon rates for both maturities were set at 0.40 percentage points above the respective individual market average yields, with the issuance yield observed in the mid-4% range.

Market participants noted that SK On achieved its target in its first capital markets deal since strengthening its financial position through the large-scale rights offering and the absorption of SK Enmove. Notably, the bonds were fully subscribed despite a recent surge in market interest rates and a generally subdued appetite for corporate bonds.

In August, parent company SK Innovation Co. [096770] completed a 2 trillion won ($1.5 billion) third-party rights offering via a price return swap (PRS) agreement with investors. Earlier this month, SK On absorbed SK Enmove, a base oil and lubricants producer, further enhancing its profitability and financial structure.

Korea Ratings, a major domestic credit rating agency, stated in a report released on the 14th, “While it may take some time to improve the group’s overall earnings structure given the battery division’s weak performance, the additional merger with SK Enmove, which boasts strong profitability and a solid financial structure, is expected to help SK On maintain improved key financial indicators.”

hskim@yna.co.kr

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