Korea Eximbank(www.koreaexim.go.kr) announced on January 28 that the Bank issued a 40 billion yen Uridashi bond for individual small investments and became the first Korean institution to do so. The Bank also held a signing ceremony for the bond.
*Uridash Bond: bonds issued outside of Japan which are acquired by a managing underwriter for sale to individual Japanese investors in a small-scale investment.
The Uridashi bond issued by Korea Eximbank is a yen denominated bond with a maturity of 4 years and a fixed interest rate. The bond was issued at a rate of 1.05%, which is over 40bp lower than that of Samurai bonds issued to institutional investors.
Only institutions with top credit ratings and MDBs have participated in Japan's Uridashi bond market because most of the customers are characterized as very conservative and known as "Madame Watanabe."
Korea Eximbnak became the first Korean institution to successfully issue the Uridashi bond. The Bank took full advantage of growing interest among "Madame Watanabes" who are looking to invest in Korea due to continued low interest rates in Japan.
In addition, the Bank worked closely with a Japanese managing underwriter*, to target retail-banking, given that individual investors in Japan expect a much lower rate of return than institutional investors from the Samurai Bond.
*Daiwa Securities Capital Markets
As a result, the Bank successfully attracted 40 billion yen in investments, despite being 40bp lower than Samurai Bonds in terms of interest rates, and reaffirmed the Bank's position as the leading domestic bond issuer and pioneer of new markets for foreign bond issuance.
An official from the Bank stated, "By successfully issuing this bond, we have initiated an issuance platform to take advantage of the Japanese market which is the world's second largest resource of individual investment funds. We will continue to diversify sources for funding and secure a stable supply of overseas capital in foreign currencies in order to finance large-sized foreign projects such as the UAE nuclear power plant."
*Last year, the Bank secured 3.6 billion dollars from non-US dollar denominated niche markets.
Korea Eximbank plans to utilize the funds to assist overseas projects and natural resources development executed by Korean corporations.