The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Yong Hwan Kim, “ Korea Eximbank”) announced on June 18 that it successfully issued AUD 500 million (USD 510 million) in Kangaroo Bonds* in Australia’s bond market. The issuance represents the largest issuance of the bond by a Korean institution.

* Australian dollar-denominated bond issued by foreign institutions in Australia’s capital market.

The interest rate for the bond was 1.90% over the Bank Bill Swap (BBSW), the short-term interest rate applied in Australia. The rate is more than 100bps lower than that of other Kangaroo Bonds issued by a Korean institution this year.

The bond issuance is significant in that the Bank successfully targeted Australian investors who have a reputation for being conservative and sensitive to issuance rates.

Australian investors normally demand a high premium for a foreign institution’s first issuance. Korea Eximbank, as the leading bond issuer in Korea, made efforts to lower the issuance interest rate in consideration of subsequent bond issuances by Korean institutions.

A representative of the Bank commented, “We noted that Australian investors, after suffering losses in Europe, sought to diversify into Asian markets. Last week, we held an IR seminar for local institutional investors.”

As a result, we received over AUD 800 million worth of orders by closing, four times our target amount, from over 100 institutions.

Middle Eastern central banks and oil money participated in the issuance in addition to Australian insurers and asset managers. The success of the issuance is regarded as a result of strong networks with Middle East institutions. The Bank has concluded MOUs with 17 major financial institutions and hosted the MENA Conference since Chairman Yong Hwan Kim’s appointment to Korea Eximbank.

Korea Eximbank raised USD 7.8 billion (71% of its target of USD 11 billion) so far this year, leading other Korean institutions in foreign currency borrowings.
In addition to the Kangaroo Bond, Korea Eximbank issued USD 4.5 billion this year through diverse channels, obtaining investments from non-dollar-denominated bond markets in Japan, Switzerland, and Brazil.