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Korea Exim News

Korea Eximbank Raises Korea’s First SOFR-linked Bonds

Date 2020.08.21 View 8972

The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman BANG, Moon-kyu, “Korea Eximbank”) announced August 19 that the Bank successfully issued USD 100 million floating rate bond linked to Secured Overnight Financing Rate (“SOFR”).

SOFR is a one-day Repo rate for U.S. dollar-denominated derivatives and loans, which is expected to replace London Inter-bank Offered Rate (LIBOR) that will supposedly discontinue after December 31, 2021.

 

It is the first Korean paper referencing SOFR and the third deal of its kind in Asia following ADB and Bank of China.

 

         < General Terms and Conditions >

Amount

USD 100 million

Maturity

1 year

Type

Floating Rate linked to SOFR

Interest rate

SOFR + 60bp (≒ 3M Libor + 43bp)

Lead Manager

JP Morgan

 

The SOFR bond would yield 60bp above SOFR for one year maturity, which is the similar level to the rate of LIBOR based bonds of the same maturity.

Korea Eximbank put great efforts to attract investments from large-scale institutional investors by tapping into their demand for SOFR bonds through various channels.

 

This issue served to help check the overall status of the Bank’s internal infrastructure used to calculate interests using daily SOFR.

 

A Korea Eximbank official said, "Because LIBOR would be unavailable after December 31, 2021 as scheduled, despite the COVID-19 shock, we needed to prepare ourselves for the transition."

He added, “Other Korean financial institutions considering introducing SOFR will likely benchmark our Bank’s recent issuance of the bonds to arrange their deals in SOFR."