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Korea Exim News

Korea Eximbank Issues Euro Bonds at Negative Interest Rate following the Government’s Issuance of Foreign Exchange Stabilization Bond

Date 2020.09.15 View 9363

The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman BANG, Moon-kyu, “Korea Eximbank”) announced September 15 that it has issued $1.5 billion worth of global bonds to investors around the world.

Korea Eximbank issued three-year bonds worth 500 million euros, $400 million in five-year dollar bonds and $500 million in ten-year dollar bonds.

 

A total of 251 investors issued orders worth $7.62 billion, 5.1 times the bank’s target amount, reaffirming overseas investors' strong confidence in bonds issued by Korea Eximbank as a safe asset.

Amid increased volatility in the global financial markets sparked by a number of issues including the poor performance of the U.S. stock market, the Korean government has issued foreign bonds at a negative interest rate (Euro) for the first time on September 9, which was the lowest interest rate ever. Korea Eximbank’s offerings gained momentum after the government’s issue and drew strong investment demand from global investors.

 

By benchmarking the government’s bonds, Korea Eximbank went on to set the interest rates 10 to 15bp lower than its previous issues, leading the way for domestic institutions to raise funds at lower costs.

Out of the offerings of the bank, the three-year euro-denominated social bonds carry a yield of minus 0.118 percent, the lowest among the capital instruments issued to date in Korea, while the ten-year dollar denominated bonds also achieved the narrowest among issues since the 2008 financial crisis.

Korea Eximbank’s latest issues following the Korean government's sovereign bonds are expected to help Korean issuers reduce funding costs from overseas capital markets in the future.

 

A Korea Eximbank official said, "The government has successfully issued bonds for its foreign exchange stabilization scheme last week, which served as a benchmark for the bank’s bond yields. Thanks to the sovereign bonds as well as overseas investors’ favorable evaluation of Korea's response to the COVID-19 pandemic and external soundness, we were able to secure funds at low interest rates."

 

He added, “We plan to use the proceeds to support financially-strapped small-and medium-sized companies suffering from COVID-19 and the Korean version of New Deal programs.”