Doosan Co. is poised to raise up to 80 billion won ($58 million) in bond sales this week following its credit rating upgrade as the holding company of energy and machinery-focused Doosan Group is emerging as a darling in South Korea’s BBB-rated bond market.
Thanks to strong demand particularly from high-yield funds chasing BBB-rated corporate bonds, two other Doosan Group units — power plant builder Doosan Enerbility Co. and Doosan Fuel Cell Co. — have sold new debts to raise a combined 178 billion won this year at lower coupon rates than expected.
This week, Doosan is offering to sell 40 billion won worth of new bonds in two tranches, according to sources with knowledge of the matter on Monday. It is evenly split into 20 billion won with a maturity of one and a half years and 20 billion won carrying a two-year maturity.
The company leaves the door open to double the issuance amount depending on demand. If its issuance volume rises to 80 billion won, it will be twice as much as the 54.0 billion won it raised in the domestic bond market in March this year. The March issues were almost twice oversubscribed.
(Graphics by Dongbeom Yun)
KB Securities Co., Mirae Asset Securities Co., Kiwoom Securities Co. and Korea Investment & Securities Co. are joint bookrunners. They will carry out book building on Tuesday. Doosan will use the proceeds to repay maturing debts.
The new bond sale comes shortly after Korea Investors Service (KIS), a South Korean arm of global rating agency Moody’s, on June 19 raised Doosan rating by one notch to BBB+ with a stable outlook from BBB.
It marked the first time that Doosan Group recovered to the BBB+ rating since it fell into court receivership in 2020 to receive emergency funding from the state-run Korea Development Bank.
The conglomerate graduated from the court protection program in February 2022.
(Graphics by Dongbeom Yun)
With the rating move, KIS said Doosan Group’s core units such as Doosan Bobcat Co. and Doosan Enerbility Co. are enhancing the group’s financial strength with stable results after its court-led restructuring was completed.
“After Korean Air Lines Co., previously considered a BBB-rated bond market leader, was upgraded to the A-level, Doosan Group’s corporate bonds are emerging its alternative,” said a debt capital market official at a leading Korean brokerage company.
“Other Doosan Group units such as Doosan Robotics and Doosan Tesna are likely to jump in the bond market.”
By Hyun-Ju Jang
blacksea@hankyung.com
Yeonhee Kim edited this article
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