Korea Development Bank (KDB) has issued 700 million Australian dollars (US$475.23 million or 574 billion won) worth of kangaroo bonds in the Australian bond market.
The state-run bank announced on Aug. 21 that it succeeded in issuing large-scale kangaroo bonds at low interest rates on Aug. 20 despite an increasing volatility in global markets.
Kangaroo bonds refer to debt denominated in Australian dollars and issued by non-resident companies and financial institutions in the Australian financial market. The latest issuance has reconfirmed a strong demand in bonds issued by a South Korean bank among global investors despite various external variables such as the trade dispute between the United States and China, the Japanese government’s export restrictions and concerns over the economic slowdown.
KDB raised 500 million Australian dollars with bonds that carry an interest rate equivalent to the Australian swap rate plus a risk premium of 0.78 percentage point. The remaining 200 million Australian dollars worth of bonds carries a fixed interest rate of 1.5725 percent. A bank official said, “Thanks to an abundant liquidity and investment demand in the Australian capital market, we have successfully issued the bonds at interest rates which are 0.10 percentage point more competitive than U.S. dollar-denominated bonds.”
The bank expected that the latest issuance of kangaroo bonds would help create a favorable atmosphere for public issues by South Korean institutions and diversify their funding sources. In fact, the kangaroo bonds issued by the bank have recorded the lowest spread among five-year kangaroo bonds issued by banks and companies, except for governments and international organizations, since the global financial crisis in 2008.