KHFC is preparing a US dollar five year covered bond that will be the first South Korean benchmark in a year, having announced a roadshow that will start next week. Despite recent tensions on the Korean peninsula, covered bond spreads have remained resilient.

Korea Housing Finance Corporation (KHFC) has mandated BNP Paribas, Citi, ING and Standard Chartered to arrange a series of investor meetings commencing on Monday ahead of a potential US dollar Reg S/144A five year issue. The roadshow will visit Asia, Europe and the US.

Mirae Asset Daewoo will be a joint lead manager.

The new issue will be KHFC’s sixth cross-border benchmark covered bond. Its last was a $500m (Eu424m, Won567tr) five year issue on 4 October 2016 – the most recent benchmark from the country.

KHFC’s compatriot, Kookmin Bank, announced a mandate for a US dollar issue in March, but the deal did not emerge.

State-owned KHFC issues covered bonds under distinct legislation specific to the institution, whereas Kookmin, the only other issuer of South Korean covered bonds to date, issues under national legislation that took effect in 2014.

Tensions between the US, its ally South Korea, and North Korea have weighed on market sentiment in recent weeks, but a syndicate banker said that Asian primary markets had remained conducive and South Korean covered bond spreads were unmoved.

Moody’s assigned a provisional Aa1 covered bond rating to KHFC’s expected issue yesterday (Tuesday) afternoon.

The new issue is set to be the first benchmark US dollar covered bond since 6 September, when Aareal Bank issued a $625m three year.