Editorial: Korean rescue is only a start
Lead-managing Korea's sovereign bond issues will be the reward for Korea's financial advisers, Goldman Sachs and Salomon Brothers. The two firms have put in thousands of man hours of work so far without payment and with no contract from the old or new Korean governments. Much of this work has been on preparing rating agency presentations. The agencies visited Seoul during the second week in January, and Standard&Poor's, which had downgraded Korea further than Moody's before Christmas, quickly signalled it was reviewing for a possible up-grade, which was confirmed in February.
While the commercial banks began preparing for their roadshow on the maturity extension programme, Goldman and Salomon began working with Koreans on the disclosure standards needed for a fully-SEC registered bond offering.
Distributing the issues will be an intriguing exercise. Many bondholders who own Korean bonds bought them when the country was rated AA-. When the first bonds are sold under the $9 billion programme, the country is still likely to be below investment grade and bonds will be marketed to a new group of investors: so-called cross-over buyers which specialize in credits that are likely to be up-graded to investment grade in the near future.