Skip to content
  • KOSPI 2710.38 -10.01 -0.37%
  • KOSDAQ 890.79 +1.35 +0.15%
  • KOSPI200 360.89 -1.50 -0.41%
  • USD/KRW 1197.8 3.60 0.30%
  • JPY100/KRW 1,051.62 4.12 0.39%
  • EUR/KRW 1,353.87 1.20 0.09%
  • CNH/KRW 189.1 0.67 0.35%
View Market Snapshot

Export-Import Bank of Korea ups Aussie bond sale size to $460 mn on demand

By May 20, 2020 (Gmt+09:00)

The Export-Import Bank of Korea (KEXIM) has nearly doubled the size of its planned new bond sale in Australia to A$700 million ($460 million) on strong demand, paving the way for other  state-owned South Korean companies seeking to raise capital in Australian dollars.

KEXIM had been preparing to raise A$400 million in three-year bonds denominated in the Australian currency to save funding costs, after it paid hefty premiums to sell dollar bonds of $700 million last month.

Its offering was more than four times oversubscribed in the book-building for institutional investors held on May 20, attracting A$1.7 billion, according to investment banking sources.

The A$700 million debt was split into a A$200 million tranche at a fixed annual coupon of 1.311% and a floating-rate note of A$500 million carrying a 1.07% yield over the benchmark three-month bank bill swap rate (BBSR). The floating rate is more than 10 basis points lower than KEXIM’s proposed rate.

In comparison, the yield on three-year Australian government bonds hovers around the targeted 0.25%.

KEXIM’s credit rating is AA, three notches below the top grade and on a par with South Korea’s sovereign rating.

With the bond sale, the state-run South Korean lender is set to become the first Asian borrower in Australia’s bond market since the coronavirus outbreak in January.

The issuance will also mark the first bond sale by a South Korean entity in Australia since Korea Southern Power Co. Ltd. raised A$300 million in five-year bonds in October last year. At that time, the power utility had paid a premium of 97 basis points over the BBSR.

“A few companies (in South Korea) recently have succeeded in dollar bond sales, but their funding costs shot up,” said one of the sources. “Given that the swap costs for the Australian dollar into the US dollar are being lowered… Aussie bonds would become the alternative source of funding to the US dollar market.”

Korea Express Corporation had prepared to sell A$300-A$400 million in new Australian bonds early this month, but put it on hold because of the coronavirus spread.

Last month, KEXIM sold three-year dollar bonds for $700 million at a 1.2% point over the three-month LIBOR. The spread was higher than the LIBOR plus 0.35% offered by another state-run lender Korea Development Bank in February to issue global bonds.

JPMorgan, National Australia Bank, Mitsubishi UFJ Financial Group and Westpac managed the Australian bond sale for KEXIM.

Write to Jin-sung Kim at

Yeonhee Kim edited this article

Comment 0