The Largest Bond Sale by a Korean Institution
The Export-Import Bank of Korea (Korea Eximbank) has successfully issued foreign currency bonds worth US$3.5 billion, the largest amount it has ever raised.
The bank raised US$1 billion by selling three-year bonds, US$1.5 billion with five-year bonds and US$1 billion with 10-year bonds.
Korea Eximbank explained that the foreign currency bond sale was the largest in amount among bond sales to foreign investors by Korean issuers, excluding the Korean government. The state-run bank stressed that it made efforts to attract global investors, as Korean bonds are not favored due to Heungkuk Life Insurance’s delayed exercise of call options and instability in the Korean bond market.
In particular, the 10-year bonds are blue bonds that are sold to raise funds for investment in eco-friendly marine projects such as eco-friendly shipbuilding and marine renewable energy development.
Korea Eximbank has been encouraged by the success of the bond issuance. Subscriptions hit a record high of US$17 billion. The figure once crossed US$20 billion. The orders came mainly from large banks and asset management companies in Asia, Europe and the United States. By region, Asian investors accounted for 37 percent, European and Middle Eastern investors 32 percent and U.S. investors 31 percent. By institution, pension funds, insurance companies and financial management companies accounted for 46 percent, banks 29 percent and international organizations and central banks 25 percent.
“We minimized the new issuance premium by pulling down the final issuance rate by 0.35 percentage points from the initial offer rate for each maturity due to a high subscription multiple,” Korea Eximbank said. “The subscription multiple this time stood at 4.9, which is higher than the average subscription multiple of 2.6 in the U.S. market on the previous day.”