Korea Successfully Issues 1.45 Billion FX Stabilization Fund Bonds
The Korean government successfully issued US $1.45 billion worth of Foreign Exchange Stabilization Fund Bonds on September 10, 2020. The US $625 million dollar bonds and EUR 700 million euro bonds were issued in dual tranche format, with tenors of 10 years and 5 years.
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10-year dollar bonds
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5-year euro bonds
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Amount
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US $ 625 million
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EUR 700 million
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Tenor
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September 16, 2030 (10 years)
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September 16, 2025 (5 years)
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Yield
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1.198% (10-year US Treasury + 50bp)
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-0.059% (5-year EUR Mid-swap + 35bp)
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Coupon rate
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1.000%
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0%
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Sales Evaluation
1) The sales reaffirmed the global investors’ strong confidence in the Korean economy despite uncertainties over COVID-19. This also shows how investors evaluated Korea’s response to COVID-19 pandemic and fiscal soundness.
2) The 5-year euro bonds were issued at a lowest yield of -0.059 percent, which is the first time for a non-European country to issue negative yielding bonds.
Expected Outcome
The issuance of FX Stabilization Bonds at the lowest yield ever is expected to contribute to pushing down the overall yield curve of the Korean Sovereign bonds, as well as to lowering international debt financing costs for other Korean borrowers in the private sector by providing a lower benchmark secondary rate.
Please refer to the attached pdf
