Korea Securities Finance Corp. has issued foreign currency-denominated debt for the first time in its 71-year history, marking its debut in global capital markets. It is also the first securities finance company anywhere in the world to sell a public global bond.
The company said on the 6th that it had successfully placed $300 million of foreign currency-denominated bonds, known as global bonds, and held a ceremony on Oct. 2 to sign the underwriting agreement with related institutions. It is the first foreign currency bond sale since the company was founded in 1955.
The notes are three-year U.S. dollar-denominated public bonds priced to yield 4.977% a year, or 0.47 percentage points over three-year U.S. Treasuries. Moody's assigned the company an Aa2 rating, matching South Korea's sovereign credit rating. Korea Securities Finance said it drew interest from global investors on the strength of its credit quality despite the constraints of a debut issue.
Orders totaled $2.4 billion, or eight times the amount offered, the largest for a recent Korean issue carrying the sovereign rating. Banks accounted for the biggest share at 48%, followed by asset managers at 39% and other investors at 13%. High-quality global investors turned out in force even as shifts in monetary policy among major economies and geopolitical uncertainty weighed on external conditions.
To build overseas demand, the company held roadshows in Singapore and Hong Kong, where it highlighted its public role in South Korea's capital markets and its financial soundness. It plans to use the sale to diversify its funding channels, which had been concentrated at home, into global markets.
Since Kim Jung-gak became chief executive, the company has moved to expand its global capabilities, winning a license for foreign exchange swap dealing and setting up a Hong Kong subsidiary. Korea Securities Finance said the sale will broaden its foreign currency funding base while also expanding its capacity to supply foreign currency liquidity to the domestic capital market. "We will continue working to contribute to the development of the capital market in the foreign currency segment," the company said.
