Korea Investment 1st Korean broker to sell samurai bonds

Korea Investment & Securities Co. on Friday became the first South Korean brokerage company to sell samurai bonds, raising 20 billion yen ($145 million) in the Japanese currency.

The debt sale comes after Seoul agreed last month to resume a bilateral currency swap with Tokyo after an eight-year suspension amid the thawing of their relations.

Korea Investment said the bonds were sold in five tranches. The one-year maturity issue of 6.3 billion yen carries an interest rate of 1.04% per annum, with the one-and-half-year debt of 1.6 billion yen issued at 1.36%.

The three-year debt of 6 billion won was offered at 2.25%.

The two-year notes of 6.1 billion yen were divided into 5 billion yen at 0.48%, backed by Sumitomo Mitsui Banking Corp. (SMBC); and 1.1 billion yen at 1.53%.

SMBC Nikko Securities underwrote the issues.

The issues signal a revival in the samurai bond market for South Korean companies and their investment in the neighboring country, industry watchers said.

A samurai bond is a yen-denominated bond issued in Tokyo by a non-Japanese company, or a foreign government.

“This issuance diversified our funding sources and improved our funding capabilities,” said a Korea Investment official. “We will further accelerate our global business.”

The issues also marked the first foreign-currency bond sale by a South Korean securities company, excluding dollar-denominated notes.

Korea Investment said it will use the proceeds for Japanese investment, without specifying.

Last month, Korean Air Lines Co. raised 20 billion yen in samurai bonds, following Hyundai Capital Co. and Shinhan Bank, which sold 20 billion yen and 32 billion yen in the Japanese-currency bonds last year, respectively.

Write to Sang-Hoon Sung and Hyun-Ju Jang at uphoon@hankyung.com

Yeonhee Kim edited this article.