Korea Housing Finance Corporation announced the mandate for a US dollar benchmark covered bond today (Thursday), which is due to be launched, subject to market conditions, following a roadshow starting next Wednesday, according to a syndicate official at one of the leads.

Seoul, South Korea

Citigroup, Nomura and Standard Chartered Bank were awarded the mandate for the new issue, which will come in Reg S/144A/3c7 format and be backed by residential mortgages, with an expected Aa1 rating from Moody’s.

The roadshow will take place from 13-21 February and the issuer will be meeting with eligible professional and institutional investors in Asia, Europe and the US, according to the mandate announcement.

The deal will be KHFC’s third benchmark covered bond, the issuer having sold $500m five year issues in July 2010 and July 2011. A syndicate official at one of the leads said that the 2015s were trading at 80bp over mid-swaps mid and the 2016s at 92bp over – the deals were re-offered at 197bp over and 171bp over, respectively.

Covered bond legislation is close to being passed in South Korea after the country’s cabinet on 29 January approved draft legislation, paving the way for the bill to be submitted for parliamentary approval in February, according to the Korean financial regulator.

KHFC has been able to issue covered bonds under legislation governing the state-owned institution, and the timing of its latest new issue project is not thought to be connected with developments affecting the introduction of general covered bond legislation.