Lender succeeds in selling yen-dominated bonds at low interest rates for second year


The Export-Import Bank of Korea said Thursday it has issued Samurai bonds worth 100 billion yen ($1.25 billion), the largest amount ever to be issued by an Asian institution, despite instability in global financial markets.

Samurai bonds are yen-denominated bonds issued in Tokyo by non-Japanese companies, and are subject to Japanese regulations.

The maturities are two years for bonds worth 51.4 billion yen, three years for 41.2 billion yen and five years for 7.4 billion yen.

Interest rates were set at less than 1 percentage point above the yen LIBOR rate ― 1.11 percent, 1.25 percent and 1.38 percent ― the lowest for Samurai bonds issued by Korean companies since the Japanese financial market began to slump because of the eurozone fiscal crisis in October.

Korea Eximbank said its successful issuance of Samurai bonds at low interest rates for two years in a row is expected to help other Korean institutions float yen-denominated bonds.

Since early this year, the state-run bank established regular consultative bodies with Japan’s three biggest banks ― Sumitomo Mitsui Banking Corporation, Bank of Tokyo-Mitsubishi UFJ and Mizuho Bank ― and strengthened its ties with the Japan Bank for International Cooperation.

By floating bonds, Korea Eximbank raised $2.2 billion in the Japanese market so far this year ― or about 34 percent of the foreign currency it aims to raise this year.

The bank said it will continue to make efforts to tap into foreign markets with high liquidity in currencies other than the U.S. dollar, such as Hong Kong, Switzerland, Thailand and Australia, to raise funds.

Thomson Reuters DealWatch last month chose the yen-denominated bonds issued by Korea Eximbank in June last year as the “Samurai Bond of the Year 2011.”

The bank had issued Samurai bonds worth a record 80 billion yen with maturities ranging from two to three and five years when issuances of the yen-denominated bonds plunged after the earthquake that hit Japan’s eastern coast in March.

By Kim So-hyun (sophie@heraldcorp.com)