Korea’s Heungkuk Life Insurance Co. which had last week announced skipping the call option on November 9 on its USD 4.475% Perp has reversed its decision. The insurer will now redeem its 4.475% perps at 100 tomorrow, leading to a 25 point rally in the perps to 99.75 currently.
The company’s skipping the call date last week triggered a sudden risk-off across Korean bank perps with the likes of Kookmin Bank, Shinhan Group, Woori Bank seeing their Perps dropping over 5 points. Had Heungkuk not called the bonds, the coupon would have been reset to the US 5Y yield plus a spread of 247bp leading to a new coupon of over 6.85%. At the time when Heungkuk had said that they would not call their perp, they cited the inability to issue subordinated bonds due to volatile market conditions making redemption “impracticable”.
With the latest reversal by Hengkuk, Woori Bank’s USD 4.25% Perp rose 3.1 points to 85.74, yielding 12.95%. Similarly, Kookmin’s USD 4.35% Perp was up by 2.5 points to 91, yielding 10.44% and Shinhan Group’s USD 5.875% Perp jumped 3.3 points to 96, yielding 11.5%.
