Foreign Exchange Stabilization Bonds
worth US $1 Billion Sold
The Korean government successfully sold US $1 billion worth of 10-year government-issued dollar-denominated bonds to strong global demand on January 12, 2017.
Issuance Details
This was Korea's first dollar-denominated bond sale since the country's AA sovereign credit rating upgraded in the second half of last year.
The bonds were sold at 55 basis points over comparable US treasuries.
Amount | US $1.0 billion |
Maturity | 2027 (10 years) |
Yield | 2.871% (10 year US treasury + 0.55%) |
Coupon rate | 2.75% |
Sales Evaluation
The 2.871 percent yield is the lowest yield ever for government-issued dollar-denominated bonds. Also, the rate is low compared to equivalents issued by countries with similar credit ratings: One basis point lower than Ontario savings bond[1] yield and JBIC bond[2] yields. Strong global demand, which amounted to US $3.0 billion, lowered the spread to a record level of 55 basis points
Global investors from Asia, Europe, the US and other regions showed avid interest in the bonds as a total of about 70 financial institutions participated in the bidding.
10 Year Dollar Bond Sales
(US $ billion, %, bp)
1998 | May 2003 | Sept 2004 | Dec 2006 | April 2009 | Sept 2013 | |
Amount | 3.0 | 1.0 | 1.0 | 0.5 | 1.5 | 1.0 |
Yield (%) | 9.083 | 4.306 | 4.965 | 5.178 | 7.260 | 4.023 |
Spread (bp) | 355 | 92 | 85 | 69.6 | 437.5 | 115 |
Expected Outcome
The sales is expected to contribute to lowering external debt costs for the private sector as well as state-owned financial institutions and public enterprises by providing a lower benchmark yield rate, and to stabilizing CDS premiums by increasing FX stabilization bonds in the market.
[1]Issued by the province of Ontario
[2]Issued by Japan Bank for International Cooperation, to which the government provides guarantees
Ministry of Strategy and Finance of the Republic of Korea published this content on 16 January 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 16 January 2017 08:35:05 UTC.
Original documenthttp://english.mosf.go.kr/pc/selectTbPressCenterDtl.do?boardCd=N0001&seq=4234
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