The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Lee Duk-Hoon, "Korea Eximbank") announced on June 4 that it successfully issued a CNY 1.25 billion (USD 0.2 billion) Dimsum Bond with a three-year maturity in the evening on June 3.

* Dimsum Bond is a CNY denominated bond issued in the Hong Kong bond market. In July 2012, Korea Eximbank had issued Dimsum Bond amounting to CNY 1.75 billion, the largest scale for a Korean institution that has ever issued.

Pricing has been set at 3.60% and Libor + 0.51% after USD swap, lower than that of public offerings in the US dollar market.

Korea Eximbank had previously issued CNY 1 billion offshore bonds, consisting of CNY 0.3 billion Dimsum bonds and CNY 0.7 billion Formosa bonds* last February.

* Formosa bond: Non-Taiwan dollar-denominated bond issued in the Taiwanese bond market.

Korea Eximbank is the only Korean institution which has successfully issued the offshore CNY public bonds this year.

The successful Dimsum Bond issue by Korea Eximbank was welcomed by the market as having timely spotted the demands of bond investors in Hong Kong of diversified investment market.

In the Dimsum Bond market, swap conditions which have turned deteriorated since March resulted in the decreased issuance by non-Chinese issuers who would need to swap to dollars upon issuance, and henceforth the market has been occupied mostly by Chinese issuers.

Korea Eximbank was able to secure the competitive interest rate by convincing the investors, who have been craving for investment diversification, to lower the required rate of return.

A Korea Eximbank official remarked, "After the Bank had successfully issued a USD 2.25 billion Global Bond in January this year, it has been constantly monitoring the CNY market to diversify its bond portfolio through cross-currency issuance."

The official added, "Although swap conditions have slightly deteriorated compared to that in the earlier this year, the Bank could lower the coupon rate by strongly claiming its differentiated position as one of non-Chinese issuers by whom bond issuance has recently shrunk in the market. Hence the issue is meaningful in that it established the channel for Korean institutions re-entering the Dimsum Bond market."

In this offshore CNY bond issue, HSBC and Bank of China participated as managing underwriters.

The deal sets a good precedent of the cooperation with Chinese financial institutions showing constantly growing influential power in the international financial markets.

It is anticipated thus that not only Korea Eximbank but also other domestic bond issuers will have more opportunities to use the capital market network of Chinese financial institutions.

Meanwhile, Korea Eximbank has been devoting all its energy to secure financing in foreign currencies needed for Korean firms' global expansion by raising USD 6.1 billion to date this year. Korea Eximbank is making efforts to save on borrowing costs for foreign currencies and to pioneer a niche market by issuing bonds in various currencies apart from this offshore CNY bonds.