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South Korea's trade bank issues largest dollar bonds at 2.5 bln USD

Xinhua, May 19, 2016 Adjust font size:

South Korea's trade bank said Thursday that it has issued its largest-ever U.S. dollar bonds worth 2.5 billion U.S. dollars to help finance the government-led restructuring of shipbuilders and shipping firms.

One billion dollars of three-year, fixed-rate bonds were sold overnight, along with 500 million dollars of three-year, floating-rate bonds and 1 billion dollars of 10-year, fixed-rate bonds, according to the Export-Import Bank of Korea.

It was the largest except the government-issued bonds, much larger than the bank's previous issuances of 400 million dollars of Green Bond in February and 750 million euros of euro bond in March.

The yield of the three-year, floating-rate bonds was 70 basis points on the three-month Libor. The three-year, fixed-rate bonds yielded 77.5 basis points on the three-year U.S. Treasury Note, while the 10-year bonds had a yield of 82.5 basis points on 10-year U.S. Treasury Bond.

Main arrangers of the bond sales included Bank of America Merrill Lynch, BNP Paribas, Citi, Goldman Sachs, HSBC, Nomura and Mirae Asset Daewoo.

An official with the trade bank said that the bond sales were meaningful as it raised funds on its own for financial support to local companies amid ongoing discussion on how to help finance the corporate restructuring in struggling companies, especially shipbuilders and shipping firms.

The South Korean government is pushing to restructure loss-making companies in shipping and shipbuilding industries. How to finance the restructuring is under discussion among central bankers, financial regulators and economic policymakers.

Bank of Korea (BOK), the country's central bank, is required by the government to purchase bonds or shares sold by the Korea Development Bank (KDB), which in turn, lend funds from the BOK to troubling companies. It needs approval from lawmakers to amend relevant laws.

Opposition lawmakers have opposed to fund-raising from the BOK as it could lead to money-printing by the central bank, which they say would cause many side effects on the economy. Endit