The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Yong Hwan Kim, “ Korea Eximbank”) announced on July 19 that the Bank successfully issued a CNY 1.75 billion (USD 280 million) Dimsum Bond* in Hong Kong. This is the largest issuance of the bond by a Korean institution.

* Yuan-denominated bond issued by a foreign institution in Hong Kong’s capital market.

Issued at a fixed 3.25% and 3-year maturity, the bond has a USD swap interest rate of Libor +1.39%, or 10bp lower than bonds issued directly in US dollar markets.

Korea Eximbank cut the cost of funding by pricing the interest at rates comparable to securities issued by Chinese policy banks with higher credit ratings. In addition, the Dimsum Bond is considered a domestic issuance within Hong Kong.

The Bank was successful in the issuance because it took advantage of high liquidity in Hong Kong. HK investors were wary of investing in Europe due to the EU fiscal crisis but couldn’t find an appropriate investment as the Chinese government reduced deposit-reserve ratios in May and interest rates in June. For similar reasons, Middle Eastern central banks and financial institutions invested CNY 300 million in oil money.

According to Korea Eximbank, the Bank kept a close eye on the Dimsum Bond market since the beginning of the year and employed the MOST (Market Opens, Swiftly Taps) strategy for successful bond issuance.

Since August 2011, Korea Eximbank has issued the Dimsum Bond 17 times to total USD 470 million and has earned a strong reputation among investors. This most recent issuance has established a firm foundation for regular issuance of the Dimsum Bond in the future.

Korea Eximbank secured an equivalent of USD 4.8 billion in non-US dollar currencies this year by expanding into 24 currency markets. In fact, the Bank recently issued a USD 500 million Kangaroo Bond, the largest AUD-denominated issuance by an Asian institution.