Korea Issues US $1.5 Billion FX Stabilization Fund Bonds
The Ministry and Economy and Finance successfully sold a total of US $1.5 billion worth of dollar-denominated Foreign Exchange Stabilization Fund Bonds in New York on June 12, local time: US $0.5 billion worth of Green and Sustainability Bonds with a 5 year maturity sold at an interest rate of 2.177 percent and US $1.0 billion worth of straight bonds with a 10 year maturity sold at an interest rate of 2.677 percent. The bond issuance was planned to refinance US $1.5 billion worth of debt repayment upon maturity made in April this year. The US $1.5 billion is this year’s maximum cap for FX stabilization bond issuance.
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5-year Green and Sustainability Bond
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10-year straight bonds
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Amount
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US $0.5 billion
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US $1.0 billion
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Maturity date
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June 19, 2024 (5 years)
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June 19, 2029 (10 years)
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Yield
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2.177% (5-year US Treasury + 30bp)
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2.677% (10-year US Treasury + 55bp)
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Coupon rate
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2.0%
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2.5%
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Sales Evaluation
1. Reaffirm global confidence in the fundamentals of the Korean economy
The demand from global investors was very strong, yields setting at the lowest level.
2. First issue the Green and Sustainability Bond
The Green and Sustainability Bonds were the first of its kind ever sold in the global market, and the low yield of the bonds shows global investors’ confidence in Korea’s focus on ‘innovation and inclusive growth’
Expected Outcome
The bond issuance will help secure Korea’s FX reserves against increasing volatility in the global market. The low yield rates will serve as benchmark rates favorable to private sector borrowers, who are expected to save international debt financing costs.
Please refer to the attached pdf