When a number of Korean Wnancial institutions were looking to raise capital through a bond issue, Hanvit Bank beat them all. Then Hanvit dared to make its issue a two-tranche deal and raised $850 million.
Clearly investors were ready to take a chance in the Korean market, which was still reeling from the Daewoo crisis. Jonathan Brown, global head of emerging market bond syndication at JP Morgan in London, and lead-manager of the deal, says that Hanvit's issue reveals the depth of the market.
When Hanvit Wrst approached JP Morgan in December 1999, there had recently been only two other issues of comparable size, by Korea Development Bank and Korea Electric Power Corporation. But neither of those issues came from a sub-investment grade bank and neither had the accompanying risk of Hanvit's two-tranche issue. Cho Hung Bank's issues accounted for the only other activity in the Wnancial services sector, but they were considerably smaller, more traditional and did not have a signiWcant impact on the market.
The decision to make Hanvit's issue a two-tranche deal was important for the bank. Because it intended to raise such a large amount of capital, it needed to tap every investor base.