The Export-Import Bank of Korea (www.koreaexim.go.kr “Korea Eximbank”) announced on March 7 that the bank successfully issued a JPY 76 billion samurai bond.
A samurai bond is a yen-dominated bond issued in the Japanese capital market by non-Japanese entities.
The issue was made in a multi-tranche structure consisting of JPY 35 billion in 2-year maturity bonds (with an annual coupon rate of 0.40%), JPY 30 billion in 3-year notes (0.45%), and JPY 11 billion in 5-year notes (0.64%).
The yields on these respective tranches are the lowest levels ever recorded by Korean-issued samurai bonds.
Previously, the bank had issued a JPY 100 billion Samurai bond in May 2012.
Coming shortly after a USD 150 million global bond issue early this year, Korea Eximbank's successful samurai bond offering served to reaffirm the institution’s leadership among Korean debt issuers.
It also helped to differentiate Korea’s position from those of other emerging markets such as Argentina and Turkey, which saw their currency values tumble since the beginning of the Fed's QE taper.
The famously conservative Japanese investors were apparently not shaken by disruptive events such as the Ukraine crisis and the North Korean missile launch that coincided with the bond issue.
A Korea Eximbank official explained, “We decided to go ahead with this samurai bond issue after carefully monitoring the Japanese bond market situation, when we spotted a significant shortage of new issues to replace outstanding samurai bonds maturing in the first quarter of this year, at the same time as Japanese investors were looking to invest in securities with the settlement of accounts approaching for the fiscal year ended March. We also took into account that the decreasing yields on Japanese government and corporate bonds induced by Abenomics has made samurai bonds more attractive to Japanese investors.”
Korea Eximbank has been regularly raising capital in the Japanese capital market through samurai bonds, uridashi bonds, and bank loans.
Its return to the samurai market in more than 22 months signals the bank’s commitment to continuing its active funding activity in Japan.
This samurai bond issue can be seen as the outcome of the bank’s close cooperation with Japanese financial market players, which has been ongoing despite diplomatic tensions between the two countries.
Korea Eximbank has been working to strengthen its network with Japanese financial institutions by holding quarterly meetings of the 'Consultative Group with Japanese Financial Institutions' and regular joint seminars with Japan Bank for International Cooperation (JBIC) since 2012 ？ forums in which the bank discussed cooperation on project financing with its Japanese counterparts.
