Korea Development Bank (KDB) settled a AUD 650 million Kangaroo bond on the 26th of last month, drawing over AUD 1.4 billion in orders and tightening pricing by 5 basis points from initial guidance. The successful issuance has sparked industry controversy after Natixis secured its first public Korean Kangaroo bond lead mandate, following the bank's hiring of a former KDB funding team leader as coverage director at the start of this year. Questions have emerged over whether personnel connections influenced the selection, given Natixis's lack of prior public Korean Kangaroo bond lead history. KDB stated the selection considered Korean debt capital markets (DCM) bankers with extensive Australian dollar issuance experience. The Kangaroo bond market typically prioritizes deal track records when selecting lead managers, as issuers must attract both domestic Australian and offshore investors.
KDB Kangaroo Bond Attracts AUD 1.4 Billion Orders, Tightens Pricing
KDB issued a 3-year fixed rate Kangaroo bond with settlement on the 26th of last month, according to Yonhap Infomax's issuance and maturity list. The bond was priced at the Australian swap rate (SQ ASW) plus 40 basis points. KDB set initial price guidance at 45 basis points but tightened the spread by 5 basis points after bookbuilding attracted over AUD 1.4 billion in orders. The pricing compared favorably to KDB's US dollar bond yield curve. ANZ, Mizuho Securities, Natixis, and UBS served as lead managers for the transaction. The issuance strengthened KDB's position as a sovereign, supranational, and agency (SSA) issuer in the Australian dollar market, where the bank has maintained consistent funding activity.
Natixis Secures First Public Korean Kangaroo Bond Mandate After Personnel Hire
Natixis obtained its first lead mandate for a public Korean Kangaroo bond through the KDB transaction. The bank had no prior track record leading public Australian dollar Korean issuances, according to Yonhap Infomax's Korean paper lead manager list. Natixis's only previous Korean Kangaroo bond involvement was a 2022 private placement for Korea Eximbank. This contrasts with ANZ, Mizuho Securities, and UBS, which led public Kangaroo bonds for Korea Eximbank and Korea Gas Corporation in the first half of this year. Natixis hired Jeon Hyun-soo, a former KDB funding department team leader responsible for issuance operations, as coverage director at the start of this year. Industry participants have questioned whether the personnel movement influenced the mandate selection, given Natixis's limited Kangaroo bond track record both for Korean issuers and in the broader Australian dollar market.
KDB Cites DCM Experience in Selection, Industry Questions Fairness
A KDB official stated the bank selected lead managers considering factors including Korean DCM bankers with extensive Australian dollar issuance experience. Natixis employs Kang In-hwan as DCM director, who joined the bank in 2021 after building experience at Australian bank Westpac. Natixis began actively cultivating relationships with KDB before Jeon Hyun-soo's move, following Kang's hiring. Market participants noted that Natixis focused on attracting offshore investors from Europe and Asia during the offering, leveraging the bank's regional network. However, questions persist about the selection criteria, as most public sector issuers typically consider lead manager track records when forming underwriting syndicates to ensure expertise and fairness. Multiple other banks possess both Korean Kangaroo bond lead experience and Korean DCM bankers with Australian dollar market expertise. An industry source stated that while Natixis has strengths in Asia rather than Australia, and Asian investors have increasingly purchased Kangaroo bonds, the mandate award following personnel movement raises questions about the connection between the two events.
FAQ
What did Korea Development Bank do on the 26th of last month?
Korea Development Bank settled a AUD 650 million 3-year fixed rate Kangaroo bond priced at the Australian swap rate plus 40 basis points. The issuance attracted over AUD 1.4 billion in orders during bookbuilding, allowing KDB to tighten pricing by 5 basis points from initial guidance of 45 basis points.
Why did Natixis's selection as KDB Kangaroo bond lead manager raise industry questions?
Natixis secured its first public Korean Kangaroo bond lead mandate despite having no prior track record leading public Australian dollar Korean issuances. The bank hired Jeon Hyun-soo, a former KDB funding team leader, as coverage director at the start of this year. Industry participants questioned whether personnel connections influenced the selection, given that Kangaroo bond lead manager selection typically emphasizes deal track records to ensure expertise in attracting both domestic Australian and offshore investors.
How did KDB justify its lead manager selection criteria?
A KDB official stated the bank selected lead managers considering Korean debt capital markets bankers with extensive Australian dollar issuance experience. Natixis employs Kang In-hwan as DCM director, who joined in 2021 after working at Australian bank Westpac. However, industry observers noted that multiple other banks also possess both Korean Kangaroo bond lead experience and qualified Korean DCM personnel.
