South Korean household name LG Electronics made its return to the US dollar market on Thursday to print a US$800m dual-tranche deal that was enthusiastically supported by global investors, allowing it to price at a tighter spread than expected. The transaction, made up of a US$500m 5.625% three-year and a US$300m 5.625% five-year sustainability bond, was some time in the making. The borrower first visited global investors on a non-deal roadshow in late February as it had not sold a US dollar bond in more than a decade, meaning the deal was largely treated like a debut. “One of the reasons they came to the market, besides funding needs . . . is they want to diversify their funding channels,” said a banker on the deal. “[Then], their goal was . . . to achieve a competitive pricing, but then also try to really diversify in terms of their investor outreach, both geographically and in terms of different types of investors.” LG Electronics has around W4.3trn (US$3.1bn) of domestic bonds outstanding, according to LSEG data. The borrower is also setting itself up to be a more regular issuer offshore. "They are telling us they would like to be more frequent ... maybe once a year going forward," said a second banker. Having chosen a 144A/Reg S trade, the company looked to the US for support. “LG itself is a very well known household name in the US,” said the first banker. “During the roadshow we targeted them because we knew they would be interested.” US investors may find that some South Korean credits trade too tight, and similar borrowers from the country will rely on Asian investors, the first banker said. But LG Electronics attracted US investors who saw the name as a comparable to US appliance maker Whirlpool, which is rated Baa2/BBB/BBB, in line with LG Electronics' Baa2/BBB (Moody's/S&P) ratings. US investors ended up taking 28% of the three-year notes and 23% of the five-year bonds, but the first banker said the true figures were larger as some US investors participated through their Asia funds. Asia took up 47% and EMEA 25% of the three-year, and Asia 44% and EMEA 33% for the five-year. US participants mainly focused on the Whirlpool comparable, while Asian investors, and the syndicate, had comparable South Korean names in mind, and in particular other LG credits. As an example, LG Energy Solution, Baa1/BBB+ (Moody's/S&P), sold debut US$400m 5.625% three-year notes and a US$600m 5.75% five-year last year. The bonds were trading at spreads of 99bp and 109bp on Wednesday, according to LSEG data. "We always knew this is one name that would fly," said the second banker. Indications of interest were strong, at double the deal size, he said. Finding a price LG Electronics initially planned to sell its bonds a week earlier, on April 11. But the publication of hotter than expected US consumer price index data overnight shook the market and revived fears that interest rates will stay higher for longer. The South Korean company decided to wait, but on Monday the market was further unsettled by heightened tensions in the Middle East. LG Electronics watched two other South Korean borrowers visit the US dollar market, each paying slight new issue premiums to comfort investors, before it felt confident enough to come out on Thursday. Some investors had changed their indications of interest to look for an additional 5bp–10bp as the market had changed so much in the prior week, said the second banker. But the issuer was optimistic it could push through that, and hoped for a landing point of 100bp for the three-year tranche, and about 15bp wider for the five-year. The syndicate cautioned that some premium would probably be needed. "We were thinking on the three-year landing in the context of 105bp, and 120bp on the five-year," said the second banker. But the bookbuild was overwhelming, reaching a combined US$9.3bn at final guidance. The five-year bonds, which carry a sustain
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