South Korea’s state lender Export-Import Bank of Korea (Korea Eximbank) announced Tuesday it has successfully sold total $1.5 billion in dollar- and euro-denominated bonds to overseas investors.
After drawing overwhelming demand of $7.62 billion during the book building, it sold 500 million euros in three-year euro bonds, $400 million in five-year dollar bonds and $500 million in 10-year dollar bonds.
The coupon for three-year debts was set at minus 0.118 percent, the lowest among the capital instrument issued to date in Korea. The five-year notes were priced at a coupon of 0.758 percent. The 10-year bonds’ spread, 1.316 percent, was also the narrowest among issues since the 2008-2009 global financial crisis.
The bank plans to use the proceeds to support financially-strapped small- and mid-sized companies amid the COVID-19 outbreak and back state-led New Deal programs aimed at spurring digital migration and revitalizing the coronavirus-stricken economy over the next five years.
The latest offerings gained momentum after sovereign bonds worth 700 million euros and $626 million were issued at lowest-ever yields on Sept. 9.
The five-year euro bonds were priced at a record-low coupon of minus 0.059 percent, the first negative yield among issues by a non-European nation. The coupon for 10-year dollar debts was set at 50 basis points over the 10-year U.S. treasury yield, also the lowest and 10 basis points lower than previous issues that mature in 2029.
The issuing rate of forex stabilization bonds is a benchmark for state lenders, commercial banks and companies. A 10 basis points drop in the benchmark rate could help them reduce interest cost by $30-$40 million per year when funding from overseas. Annual issuance of non-Korean won-denominated debts by Korean institutions amounts to $30-$40 billion.
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