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Korea Exim News

Korea Eximbank Issues $2 billion Global Bond on the Back of Korea's Sound Economic Fundamentals

  • Date2021.06.23
  • View765

□ The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Bang, Moon-kyu, "Korea Eximbank") announced on June 23 that it successfully issued a total of $2 billion worth of global bonds to investors around the world.

 

ㅇ The global bonds were issued in a triple tranche* structure in fixed rates, consisting of $7.5 billion in three-year maturity, $7.5 billion in 5.5-year maturity and $500 million in 20-year maturity bonds.

* Triple Trench: issuing bonds in three different maturity and interest rate conditions

 

 

□ The 20-year bonds mark the longest dated paper from a Korean financial institution.

 

ㅇ Long-term bonds can be issued when there is mid- to long-term confidence in the economic fundamentals of the issuing country as well as the financial stability of the issuing institution.

 

 

□ A Korea Eximbank official said, "Korea Eximbank's successful issuance of the 20-year long-term bonds is significant in that it reaffirmed solid credibility in the Korean economy and Korea Eximbank from global investors."

 

 

□ To date, the longest dated notes sold by Korea Eximbank were in 10 years.

 

ㅇ With the successful issuance of the 20-year bonds, Korea Eximbank is considered to have a complete representation of the Yield Curve* covering short to long terms.

* Yield Curve: Graphical illustration of the relationship between the bond maturities and yields (interest rates), used as a basic data for calculating loan rates and borrowing rates of financial institutions

 

ㅇ Based on the data, Korean Eximbank can calculate competitive interest rates reflecting market conditions for Korean companies participating in large overseas projects that require longer-term financing for more than 10 years.

 

 

□ The Bank decided to up the offering to $2 billion after receiving $5.4 billion worth of orders from investors during its book-building session, nearly 3.6 times more than its initial offering of $1.5 billion.

 

ㅇ The strong demand for the long term bonds reflects that despite the global spread of COVID-19, Korea's relatively sound economic fundamentals were highlighted due to its outstanding export performance in key sectors such as shipbuilding, semiconductors, and batteries.

 

ㅇ He added, "We spotted the signs of change in the financial market and launched the deal in a timely manner in order to preemptively secure long-term low-cost foreign currency funds."

 

 

□ Prior to this issue, Korea Eximbank carried out a virtual one-on-one investor briefing session for conservative investors seeking ultra-high-quality bonds with AA ratings or higher.

 

ㅇ As a result, for three-year and 5.5-year maturity bonds, 58% of the investors were central banks, sovereign wealth funds and international organizations, attracting strong demands.

 

ㅇ In particular, for the 20-year maturity bonds, the proportion of investors seeking long-term stable investment sources, including pension funds, insurers, and asset managers, exceeded 74%, contributing to diversifying the investor base.

 

 

□ As Korea's leading foreign currency borrower, Korea Eximbank plans to diversify its borrowing methods and actively attract blue-chip investors with the goal of issuing 11 billion dollars of foreign bonds this year.

 
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