The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Lee Duk-Hoon, "Korea Eximbank") announced on March 9 that it successfully issued a €750 million Euro-denominated Bond in the evening of March 8.
This is the first euro-denominated public offering by a Korean entity since the issuance of Korea sovereign bond in 2014.
Korea Eximbank returned to the euro bond market successfully after a gap of almost three years since its issue of EUR 1 billion bonds in April 2013.
Meanwhile, Korea Eximbank issued a USD 400 million Green Bond for the second time since its first issue back in February 2013, which was the world-first issue, pioneered by the Bank.
The issue made on the day is in a 3-year tenor. The pricing on the bond was set at 0.406%, which was a spread of 58 bp over the mid-swap rate.
The bond was successfully priced at the secondary trading level of Korea Eximbank's existing bond, without new issue premium, on the back of high investor demands for affordable assets. The pricing reached the record-low level among euro-denominated bonds issued by Korean institutions.
The successful Euro-denominated Bond issue by Korea Eximbank was welcomed by the market as the Bank has timely spotted improved investor sentiment backed by the rise of stocks in major countries in sync with the rebound of international oil prices.
A Korea Eximbank official said, "With the Bank successfully returning to the euro bond market, the issue was significant in that it strengthened the status of bonds issued by Korean institutions and provided liquidity to European investors." He added, "Korea Eximbank has set a new standard for Korean institutions looking to raise capital in the euro bond market."
In fact, there was a concern about the Korean economy jittered by several unfavorable events including the economic downturn of China and the North Korean missile launch.
In response, Korea Eximbank embarked on a week-long tour of major European cities including Paris, London and Frankfurt, starting from February 29, holding IR roadshows in which the Bank assured investors of the safety of investing in Korea and stressed Korea's strong economic fundamentals.
As a result, a wide range of conservative investors such as supranationals, pension funds and asset managers known for investing in high-grade bonds participated in the offering. Furthermore, central banks of several major countries of Europe, the Middle East, Asia, Africa, etc. participated in investing by opening up their euro reserves. The participation in the offering by such conservative investors attests to the stability of the bond issued by the Aa2 rated Korea Eximbank.
The bond was oversubscribed by two times, attracting EUR 1.5 billion from 88 investors. By type of investors, central banks and supranationals accounted for 52%, asset managers 30%, pension funds and insurance companies 8%, banks 6%, and other investors 4%.
Proceeds arising from this issue will be used for extending loans in euros to Korean companies to support them in winning more overseas projects in Europe, Iran, etc.
Aiming to fund USD 12 billion this year, Korea Eximbank, the nation's biggest issuer of international bonds, is planning to diversify its funding portfolio by consistently seeking to issue bonds in non-U.S. dollar markets.
