Lotte Chemical raises US$167.7M in guaranteed bonds as petrochemical slump weighs
What's the deal? Lotte ChemicalDealroom has a profile for this one. Try Dealroom → raised US$167.7M in three-year, bank-guaranteed corporate bonds, drawing US$259.9M in orders — about 1.6 times the offering. The South Korean petrochemical maker will use the proceeds entirely to repay debt.
Why now? The company plans to refinance US$167.7M in commercial paper maturing next month and in September.
How it worked: Principal and interest are guaranteed by four commercial banks — Kookmin, Shinhan, Hana, and Woori — earning the bonds an 'AAA (stable)' rating from Korea Investors Service and NICE Investors Service. That matches the guarantor banks, and sits above Lotte Chemical's own 'AA- (negative)' rating, which agencies cut last month.
The numbers: Lotte Chemical returned to profit in the first quarter with revenue of US$4.18B and operating profit of US$61.6M. That follows operating losses of US$766.7M in 2024 and US$790.7M in 2025.
What could go wrong? The company warned the first-quarter gains came from a surge in product prices and cheap raw materials, and said the effect is expected to fade once high-priced naphtha inventory is used. Demand for the bond was described as weaker than expected, and the interest rate landed near the top of the target range at 35 basis points above the 'AAA' bank bond average yield.
The signal: Even a firm this size now leans on bank guarantees to secure a top rating and clear a bond sale, a sign of how deeply South Korea's prolonged petrochemical downturn has strained credit.
Read more: Infomax
Image credit: roy.luck
