S. Korea prices $1.3 bn sovereign bonds at cheapest rates

2021.10.07 11:33:56 | 2021.10.07 12:10:37

[Graphics by Song Ji-yoon]이미지 확대

[Graphics by Song Ji-yoon]

The South Korean government has issued sovereign bonds of $1.3 billion mixed in U.S. and euro denomination in their cheapest rates due to overwhelming demand despite global market uncertainties.

According the Ministry of Finance and Economy Thursday, South Korea issued $500 million in 10-year dollar-denominated notes and 700 million euros ($800.1 million) in five-year euro-denominated green bonds, becoming the first Asian sovereign issuer in green euro debut.

The USD bonds was priced at 1.769 percent, 25 basis points over the comparable 10-year U.S. treasury yield, and the euro bonds at -0.053 percent, 13 basis points over 5-year euro mid-swap. The rates have been lowered from the spread of 50 basis points over 10-year U.S. treasury and 35 basis points over euro mid swap in last year’s Korean sovereign issues.

The greenback proceeds become part of foreign exchange stabilization fund managed under the Korean Foreign Exchange Transaction Act. The euro bonds will go to projects fund eligible green asset categories in accordance with Green and Sustainability Bond Framework.

For U.S. bonds, subscription was in excess by four times and for euro bonds six times, the ministry said.

Earlier, the bonds were assigned with upper investment-grade ratings of AA by Standard & Poor’s, Aa2 by Moody’s and AA- by Fitch in line with their rating and outlook on South Korea’s sovereign credit.

Sovereign rates provide the basis for Korean public and corporate issuers in foreign debt.

South Korea has earmarked 1.5 trillion won in foreign debt ceiling for this year.

The finance ministry said that the successful bond sale underscored foreign investors’ confidence in the country’s fundamentals and faster-than-expected recovery from the pandemic despite growing volatility and inflationary pressure in the global financial markets.

By Lee Soo-min

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