Korea Development Bank (KDB) announced on May 28 that it has issued $1 billion in dollar-denominated Eurobonds to Asian and European investors.
The bonds were issued in a five-year fixed-rate bond structure, and the proceeds will be used as foreign currency funds to support domestic companies that have been suffering from the COVID-19 crisis.
In early April, after the COVID-19 crisis began in earnest, KDB resumed the issuance of overseas bonds of Korean products by issuing three-year bonds on Libor+145bp, but it restored the double-digit additional interest rate (Libor+85bp level) for the five-year issue, providing momentum for a full-fledged reduction in the procurement rate.
Despite the volatility of the global financial market, it was confirmed that the COVID-19 impact on Korea was limited and that investor demand for Korean goods remained strong due to the country's active implementation of fiscal and financial policies and expectations for a full-fledged economic resumption.
KDB issued US$1 billion by attracting investment orders about five times the amount issued, and the issuance rate was finally decided at a 35bp reduction from the initial price guidance (US national bonds, 5 years +125bp area).
KDB expects the issuance to help identify overseas investors' trends in Korean goods and present benchmark interest rates for the five-year period to create a favorable issuance environment for domestic institutions ahead of the issuance of overseas bonds.
After the issuance of US$500 million in public bonds by KDB on April 7, the issuance of overseas public bonds by domestic institutions was resumed, and the issuance confirmed that Korean institutions' borrowing conditions in the foreign capital procurement market were continuously improving.
