Shinhan Bank has succeeded in raising US$500 million by issuing Formosa bonds, which refer to bonds issued by foreign institutions in Taiwan's capital market in a currency other than Taiwanese dollars.
The interest rate of the five-year bonds was set at the three-month LIBOR plus 170bp, which was 40bp lower than the initially suggested rate of LIBOR plus 210bp, the bank said on April 9.
Shinhan Bank has become the first Korean commercial bank to issue foreign currency bonds in 2020. The bank at first planned to raise US$300 million but increased the amount to US$500 million as demand was estimated at US$2.1 billion.
Among those who invested in Shinhan Bank Formosa bonds, Taiwanese investors accounted for 57 percent, followed by investors from Asia except Taiwan with 36 percent, and U.S. and European investors with 6 percent and 1 percent, respectively. By investor type, banks accounted for 80 percent, asset managers, insurance companies and pension funds 19 percent, and PBs and others 1 percent.
Shinhan Bank was the second Korean financial company that succeeded in issuing dollar bonds. On April 7, Korea Development Bank (KDB) raised US$500 million by issuing Euro bonds.
With the new coronavirus spread fueling demand for U.S. dollars, the issuance of the U.S. dollar bonds is expected to boost foreign currency liquidity in Korea.
Woori Card also issued overseas asset-backed securities (ABSs) worth US$270 million against credit card sales receivables on April 9. The average maturity of the ABSs, which were issued to Societe Generale (SG), a French international bank, is three years and six months. Woori Card said it signed a currency interest rate swap with the SG Seoul branch to eliminate risk factors associated with fluctuations in exchange rates and interest rates.