Hansol Paper Attracts 450 Billion Won
Surpasses Target by More Than Seven Times
Moorim Paper Also Exceeds Expectations
Stable Market Position and Export Efforts Drive Success
Despite the sluggish market conditions, Hansol Paper and Moorim Paper, the two leading giants in the paper industry, both achieved unexpectedly strong results in their recent corporate bond offerings, marking their first public issuances in a long time. Although the industry continues to face headwinds from digitalization and declining paper demand, analysts attribute the positive reception to their stable positions as the top two players in the domestic market and ongoing efforts to diversify their businesses.
According to the investment banking industry (IB) on April 25, Hansol Paper, which returned to the public bond market after four years, attracted orders totaling 450 billion won?over seven times its initial target of 60 billion won?in its bookbuilding process. The two-year tranche (30 billion won) drew 197 billion won in demand, while the three-year tranche (30 billion won) received 253 billion won in orders. Hansol Paper ultimately decided to issue 40 billion won in two-year bonds and 80 billion won in three-year bonds, securing a total of 120 billion won.
Hansol Paper set its funding rates favorably, taking into account the strong market response. The company had initially set a desired rate band by adding and subtracting 30 basis points from its individual fair value rate (the rate assessed by private bond evaluators). However, all orders for the two-year tranche were filled at minus 32 basis points, and for the three-year tranche at minus 40 basis points. Achieving a rate cut in the double digits is unusual and reflects the highly positive assessment from investors.
Moorim Paper also posted strong results in its corporate bond offering, its first in eight years. Moorim Paper initially targeted a 30 billion won issuance for three-year bonds, but received orders totaling 98 billion won?more than three times the target. The final interest rate was set at 4.395%, which includes an additional 0.15 percentage points over the individual fair value rate. A Moorim Paper official stated, "The entire 30 billion won raised this time will be used to repay existing debt."
Analysts point to both companies’ stable positions in the market and their efforts to diversify through overseas exports as key factors behind the success. Last year, Hansol Paper significantly improved its profitability by expanding exports to North America, focusing on ballot papers for the US presidential election and promotional printing paper. Moorim Paper is also concentrating on expanding its overseas sales network, now exporting to over 100 countries including the United States.
Kim Jinil, a professor of economics at Korea University, explained, "With deposit rates being low, investors who found corporate bonds attractive likely based their decisions on the competitiveness of individual companies rather than the industry as a whole. Both companies continue to maintain solid positions in the domestic market, where there is still steady demand for paper, and are making ongoing efforts to expand exports and develop new business areas."
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