Korea Housing Finance Corporation priced a $500m five year covered bond yesterday (Tuesday), attracting some $1.1bn of orders, the majority from US investors. Market participants meanwhile noted that the last dollar benchmark, from BNS, appeared to confirm the decline of SEC-registered issuance.

KHFC leads BNP Paribas, Citi, ING, Samsung Securities and Standard Chartered opened books for the Reg S/144A issue after the Asian open yesterday, with initial price thoughts of 100bp over Treasuries. After the US open, guidance was then revised to the 85bp-90bp area, before the spread was fixed at 85bp and the size at $500m (Eu445m, Won546tr).

The final order book was $1.1bn, with 55 accounts. Accounts in the US were allocated 52%, Asia 27% and Europe 21%. Fund managers took 54%, central banks and official institutions 27%, banks 13% and insurance companies 6%.

“It looks like a pretty good result, as they were able to price a good amount inside IPTs,” said a syndicate banker away from the leads.

KHFC last issued a dollar benchmark covered bond in November 2015, selling a $500m five year, and the last benchmark covered bond from South Korea was a $500m five year issue for Kookmin in January.

Syndicate officials at the leads saw KHFC’s November 2020s quoted at 75bp over Treasuries, pre-announcement, and Kookmin Bank February 2021s at 68bp.

The last dollar benchmark before KHFC’s, a $1.25bn five year for Bank of Nova Scotia (BNS) on 13 September, has meanwhile been seen as confirmation that the advent of burdensome Reg AB II reporting requirements in the US next month is ending the issuance of SEC-registered covered bonds.

BNS’s latest dollar benchmark was its first since March 2012 not to have used the SEC-registered format that it first used in September 2014 – following the example of Royal Bank of Canada (RBC) – and issued under for its last dollar benchmark, a $2.5bn five year in April. Last month’s BNS deal was issued in 144A/Reg S format.

Market participants had speculated that the onerous incoming reporting requirements would deter foreign issuers from selling covered bonds under SEC registration, with Bank of Montreal having already, in December 2015, requested the withdrawal of its registration. After BNS’s move, RBC is the only issuer to have sold its last dollar covered bond in SEC-registered format – that was a $1.75bn five year in March.

“I don’t think the market will see any more SEC-registered transactions because those Rule AB requirements are effective November and I don’t think any underwriters or lawyers will agree to SEC platform issuance from anyone given that they most likely will not be compliant,” said a market participant.

BNS did not respond to enquiries. In the latest investor presentation available on its website, marked Q3, it lists under issuance format for its registered covered bond programme SEC-registered and 144A/Reg S.