The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Yong Hwan Kim, “ Korea Eximbank”) announced that it has successfully issued global bonds worth USD 1 billion to investors worldwide in the early morning of November 15.

The bonds were priced to yield 98bp more than US Treasuries, the lowest spread recorded by a Korean issuer since the global financial crisis triggered by the collapse of Lehman Brothers in 2008.

It is especially significant that the yield spread sank below the psychological barrier of 100bp, which had persisted despite the increased national credit rating.


Maturity : 3 years
Issuance amount : USD 1 billion
Yield : T3* + 0.98% (1.25%)
*T3 : Yield on 3？year US Treasury bonds
Lead managers : Deutsche Bank, Goldman Sachs, JP Morgan, Morgan Stanley, UBS, US Bancorp, Daewoo Securities

Korea Eximbank had initially planned to issue the bonds in late October. But as investors adopted a wait-and-see attitude due to heightened uncertainties surrounding the US presidential election and the paralysis of the New York Stock Exchange following Hurricane Sandy, the bank delayed the issuance and closely monitored the market to capture the optimal issuance time.

A Korea Eximbank official stated, “Contrary to earlier expectations that uncertainties would be removed once the the U.S. presidential election was over, the looming ‘fiscal cliff’ sent stock markets plunging. We therefore reasoned that delaying the issuance any further would make it difficult to capitalize on the momentum created by the upgrade in Korea’s national credit rating, and decided to move ahead immediately.”

Korea Eximbank had already spearheaded the global bond issuance of Korean entities at the beginning of the year, when the nation’s geopolitical risk increased due to the death of Jung Il Kim, by issuing a record USD 2.25 billion worth of global bonds (the largest amount for a Korean issuer).

By closing what may in effect be the last issuance of global bonds by a Korean entity this year with a yield spread lower than 100bp, the bank has likely set an interest rate benchmark for other Korean entities planning to issue bonds in 2013.

The bonds were purchased by over 190 investors, of whom 47% were from the U.S., 25% from Asia, and 28% from Europe. By investor type, 63% were asset management firms, 19% pension funds and insurance companies, and 14% banks.

A Korea Eximbank official said, “The capital acquired by the bond issuance will be used to provide financing at competitive rates for Korean companies competing with established multinational rivals to secure orders in the Middle East and elsewhere in the world.”