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Korea Exim News

Korea Eximbank Issues US$1.5 Bil. in Global Bonds at Lowest Spreads ever

Date 2021.02.04 View 11136

The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman BANG, Moon-kyu, “Korea Eximbank”) announced February 4 that it has succeeded in issuing global bonds worth US$1.5 billion to investors around the world. The bonds carry the lowest spreads in the history of Korean foreign-currency public bonds. Through the issuance, the Bank reaffirmed investors' trust in Korean papers as a safe asset and set a favorable market environment for subsequent issuance by Korean institutions in the future.

 

The bonds were issued in a triple tranche structure -- three types of bonds with different maturities and interest rates -- three-year bonds with a fixed interest rate (US$500 million), five-year bonds with a fixed interest rate (US$700 million) and 10-year bonds with a fixed interest rate (US$300 million). The spreads were 0.23 percentage points on three-year U.S. government bonds, 0.28 percentage points on five-year U.S. government bonds and 0.38 percentage points on 10-year U.S. government bonds.

 

With central banks, sovereign wealth funds and international institutions accounting for 51 percent of buyers, it is found that foreign investors have shown keen interest in the gilt-edged bonds above AA rating.

 

A bank official said, "We have accomodated the increased investment demands from global investors by presenting various maturities and capturing favorable timing to issue bonds on the back of abundant market liquidity and robust global investor sentiment." The proceeds from the debt sale will be used to help industries outlined in the Korean New Deal initiative including Green New Deal and Digital New Deal make inroads into overseas markets.

 

Earlier in January, Korea Eximbank succeeded in issuing five-year foreign currency bonds worth five billion Mexican pesos (US$2.6 billion) in the Mexican financial market. After swap, the final rate was 0.695% based on US dollar swap rate, lower than that of the recent five-year global bond issue. Since Korea Eximbank is recognized by Mexican authorities as Sovereign Issuer, it took advantage of the status to make use of the significantly simplified bond issuance process.

 

A bank official said, "For US-based Mexican foreign-invested companies, the swap market's seasonal demand for exchanging dollars for pesos increases significantly in the beginning of every year, and we used the seasonality to lower the rate."

 

Korea Eximbank, as Korea's leading foreign currency lender, plans to diversify its borrowing methods and actively attract blue-chip investors to make stable foreign loans with the aim of raising a total of $11 billion this year.