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Korea's Foreign Currency Bonds Sold at Second Lowest Yields

  • DivisionInternational Finance Bureau - International Finance Division
  • DateOctober 7, 2021

FX Stabilization Fund Bonds

 

Korea’s Foreign Currency Bonds Sold

at Second Lowest Yields

 

 

A total of US $1.3 billion worth of Korea’s FX Stabilization Fund bonds were issued in dollar and euro at second lowest yields ever with the spreads of 25 bps and 13 bps, respectively, compared with the 10-year US Treasury’s and 5-year EUR Mid-swap rate, both of which are the narrowest in record.  Details of the sales are as follows.

 

FX Stabilization Fund Bond Issuance, October 2021

 

 

10-year dollar bonds

5-year euro bonds

Amount

US $500 million

EUR 700 million

Maturity

October 15, 2031

October 15, 2026

Yield

1.796% = 10-year US Treasury + 25bps

0.053% = 5-year EUR Mid-swap + 13bps

Coupon rate

1.75%

0.00%

 

Sales evaluation

 

- Smallest spreads

- Second lowest yields despite rising US Treasury and EUR Mid-swap rates

- Fourfold as many bids as dollar bond offerings and sixfold as many as euro bond offerings

- First ‘green bonds’ issued in euro by Asian countries

 

Expected outcomes

 

- Lower debt financing costs of private sector borrowers

- Expand green financing from overseas

- Acquire global confidence in economic recovery, as well as disease control

- Make stable financial markets with more FX reserves

- Euro-denominated green bonds to be listed at the London Stock Exchange

 

Please refer to the attached pdf

 

Ministry of Economy and Finance
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