Kookmin opened books today (Wednesday) for the first covered bond to be launched under dedicated South Korean legislation, setting initial price thoughts of the low 90s over mid-swaps area for an expected $500m (Eu439m, Won573.46bn) issue.

Kookmin’s deal has been anticipated since the issuer completed a roadshow promoting a new $8bn programme on 25 June. It is the first covered bond to be issued under a South Korean legislative framework brought in last year.

The 144A/Reg S five year deal will be priced today New York time, according to a syndicate official at one of the leads.

Bankers noted that the IPTs are around 20bp wide of where the latest US dollar benchmark issue, a $1.75bn five year from RBC on Tuesday of last week (6 October), was priced at 72bp over mid-swaps.

Kookmin has issued a covered bond previously, selling a $1bn deal in 2009. However, that was done on a contractual basis and the only other issuance from the country has been by Korea Housing Finance Corporation under legislation specific to the state-owned institution and which pooled collateral from several Korean banks.

Fitch and Moody’s upgraded Kookmin’s covered bonds to triple-A last Thursday, reflecting amendments to mitigate currency transferability and convertibility risks and increased overcollateralisation in the South Korean bank’s programme, the rating agencies said.