Shinhan Bank sells $285 mn in Australian-dollar social bonds

Shinhan Bank has raised A$400 million ($285 million) in five-year bonds denominated in the Australian dollar to fund lending to pandemic-hit companies, the South Korean bank said on Sept. 23.

The social bonds consist of fixed and floating-rate notes. The A$250 million floating-rate note carries a yield of 0.88 percentage points over the benchmark bank bill swap rate (BBSW), with the yield on the A$150 million fixed-rate note set at 1.183%.

“We will use the funding to support small businesses and mom-and-pop stores taking direct and indirect hits from COVID-19,” said a Shinhan source.

Major buyers of the new bonds are from Australia, Asia and Europe, according to Shinhan.

The Aussie bond sale came after two state-run lenders sold a combined A$1.2 billion worth of debts in the Australian currency this year as a way to cut funding costs.

Last month, Korea Development Bank raised A$500 million in three-year bonds denominated in the Australian dollar to extend loans to companies suffering from the coronavirus fallout and to finance overseas projects. At that time, the state-run lender sold a floating-rate note of A$200 million at a yield of 0.62 percentage points over the BBSW, and raised A$300 million at a fixed rate of 0.8325%, the lowest level for an Asian bank selling Australian dollar-currency bonds this year.

In May, Export-Import Bank of Korea (KEXIM) floated A$700 million worth of three-year bonds in the Australian debt market, nearly double the size of its planned bond sale given strong demand.

Write to Daehun Kim at daepun@hankyung.com