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About the Bank

Korea Eximbank Issues AUD 500 million Kangaroo Bond

  • Date2014.04.09
  • View27463
The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Lee Duk-Hoon, "Korea Eximbank") announced on April 9 that it successfully issued a AUD 500 million (USD 470 million) Kangaroo Bond* in the Australian bond market.

* Kangaroo Bond: Australian dollar-denominated bond issued by a non-Australian institution in the Australian bond market

The first Korean-issued Kangaroo Bond to carry a five-year maturity, the bond was issued in a dual-tranche* structure, consisting of a AUD 300 million fixed-rate tranche and a AUD 200 million floating-rate tranche.

* Dual Tranche: issuing bonds in two different maturities or in two different types of interest rate (floating/fixed)

Pricing has been set at BBSW+1.08%, the lowest level achieved by a Korean issuer since the global financial crisis in 2008. The issuance is believed to have set a new standard on pricing for Korean companies looking to raise capital in foreign currency markets.

* BBSW(Bank Bill Swap Rate): the short-term interest rate used as a benchmark rate for Kangaroo Bonds

According to a Korea Eximbank official, "While rates for Korean papers in the U.S. dollar-denominated bond market remain consistently low, among non-U.S. dollar markets, the Australian market offers the best terms for issuers.”

The official added, “The Australian bond market attracts offshore investors in Asia and the Middle East as well as local investors, being the world’s fifth-largest bond market in terms of issuance volume and offering a higher benchmark interest rate than most developed markets."

The success of the issuance is attributed to Korea Eximbank’s robust communication with the market, especially through its numerous IR roadshows.

The bank successfully enticed Australian investors, who are known to be conservative, by holding regular IR meetings in Australia.

It also helped that the bank has regularly gauged the demand of offshore investors through previous issuances of Australian dollar-denominated private placement bonds and public bonds.

With some 70 investors lining up to buy the offering, Korea Eximbank scaled up its issuance amount from the planned AUD 300 million to AUD 500 million at the last minute.

Middle Eastern and Asian central banks participated in the issuance in addition to Australian institutional investors.

Korea Eximbank has built strong networks in the international financial market, concluding MOUs with 24 major financial institutions and regularly hosting the MENA Conference and Hong Kong Roundtable Conference.
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