Issuer: Republic of Korea
Date: April 1998
Amount: $4 billion
Global arrangers: Goldman Sachs, Salomon Smith Barney
Korea wins our Asian deal of the year award for sheer determination. Korean officials believed its global debut $4 billion Eurobond would save the country, and so they fought mercilessly to get a good price for it.
In December 1997 Korea was in serious danger of defaulting. The country's banking sector held $24 billion of foreign commercial bank debt. Goldman Sachs and Salomon Smith Barney advised Korea that it should first reschedule this debt and then issue a global bond to replenish hard-currency reserves which were below $6 billion. In January 1998, after heavy negotiations, the bank debt was exchanged into a three-tranche government-guaranteed debt with maturities of one, two, and three years. Almost all of the key banks accepted the deal.
The next step was to issue a global bond. Carlos Cordeiro, Goldman's head of fixed income in Asia said at the time: "Our challenge was: how tight could you drive the deal without it blowing up in your face?" A flurry of negotiations, often heated, ensued as the borrower and the bookrunners thrashed out their strategy.