(Yonhap)

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South Korea’s Lotte Engineering & Construction Co. (Lotte E&C) faced a setback in its first attempt this year to raise funds through corporate bond sale.

According to sources from the investment banking (IB) industry on Monday, Lotte E&C (rated A) received no bids for its 110 billion won ($80.58 million) public bond issuance during the demand forecast session held on the same day.

The company offered an interest rate band of 5.4 to 5.7 percent for 1-year bonds and 5.6 to 5.9 percent for 1.5-year bonds.

Given that the recent issuance yields of BBB+ rated 2-year bonds formed in the high 3 percent range, the high interest rates proposed were insufficient to attract demand.

This is not the first time Lotte E&C has struggled with bond sales.

The company also saw partial unsold volumes in a public offering last year.

Credit rating agencies also downgraded Lotte E&C’s rating from A+ to A recently, citing ongoing burdens from contingent liabilities such as project financing (PF) exposures.

The company plans to issue the bonds on Monday, which will be underwritten and distributed by KB Securities Co., NH Investment & Securities Co., Korea Investment & Securities Co., Kiwoom Securities Co., iM Securities Co., Daishin Securities Co., and Mirae Asset Securities Co.

These firms are expected to sell the bonds to both institutional and retail investors.