South Korea’s state-run Industrial Bank of Korea (IBK) said Wednesday it has successfully sold 600 billion won ($534.7 million) Korean won-denominated conditional subordinated bonds, in what would be the biggest issuance of Korean won-based conditional subordinated bonds this year.

According to IBK, its 10-year issues were sold at a coupon rate of 2.74 percent, which was 42 basis points above the country`s 10-year government bond yield, lower than expected. This is the largest sale of won-denominated conditional subordinated bonds so far this year by commercial lenders in Korea.

The bond sale is expected to raise IBK’s Bank of International Settlement (BIS) capital adequacy ratio by 0.36 percentage point, allowing the state lender to provide more financial loans to small- and mid-size companies, the bank expected.

An unnamed official from IBK said the interest rate of longer-term bonds has fallen significantly from the first half of this year, making it timely for the lender to raise capital. IBK’s high credit rating and financial soundness has also attracted more investors than expected, the official said.

IBK, meanwhile, became the first Korean lender to sell foreign-denominated social bonds worth $500 million in the global market in July. Social bonds are issued to collect investment funds to support projects with high social value.

By Lee Seung-yoon and Lee Eun-joo

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