South Korea’s KB Kookmin Bank said on Thursday that it has issued 500 million euros ($567.3 million) in covered bonds, becoming the country’s first issuer in the derivative instrument backed by mortgage in euro currency.

A total 500 million euro bonds were offered in five-year maturity at a coupon rate of 0.052 percent, which 40 basis points over the five-year euro swap rate. The bonds – that received highest AAA credit rating from global credit rating agencies Standard & Poor’s and Fitch Ratings – will be traded on the Singapore Exchange.

KB Kookmin Bank, meanwhile, has issued four foreign-denominated and 11 won-denominated covered bonds.

KB Kookmin Bank plans to use the proceeds to resolve social and environment issues such as providing financial support to coronavirus-related issues.

Covered bonds are debt securities issued by financial institutions and backed by high-grade assets such as mortgage loans. They are subject to specific legislation that guarantee bond holders dual recourse to claim for reimbursement from the issuer and to exercise preferential payment right on basic collateralized asset.

By Pulse

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