KB Financial Group Issues First Subordinated Bonds Worth 400 Billion Won to Proactively Enhance Capital Adequacy

10-Year Maturity Spread Set at '10-Year Treasury + 60bp,' Achieving Record Low Spread for Financial Holding Companies
Despite Weak Investor Sentiment, Sufficient Demand Secured and First 15-Year Subordinated Bond Issued by Financial Holding Company

[Asia Economy Reporter Kangwook Cho] KB Financial Group announced on the 18th that it has issued subordinated bonds (Basel III eligible) worth 400 billion KRW with the lowest spread ever among financial holding companies.

This subordinated bond issuance is the first since the establishment of KB Financial Group, successfully issuing 370 billion KRW with a 10-year maturity at an interest rate of 2.21%, and 30 billion KRW with a 15-year maturity at an interest rate of 2.26%.

The initial planned issuance amount for the subordinated bonds was 300 billion KRW. However, due to strong interest from institutional investors, with a bid-to-cover ratio of approximately 2.2 times (660 billion KRW), the final issuance amount was increased to 400 billion KRW, KB Financial explained. They also added that this marks the first issuance of 15-year subordinated bonds among financial holding companies.

KB Financial stated, "The purpose of this subordinated bond issuance is to proactively strengthen supplementary capital and thereby improve the BIS ratio."

Additionally, KB Financial said, "Despite the recent unfavorable market conditions, sufficient effective demand was secured," and explained, "The 10-year subordinated bonds (370 billion KRW) were issued at a spread of '10-year government bond + 60bp,' and the 15-year subordinated bonds (30 billion KRW) at '10-year government bond + 65bp,' recording the lowest spread ever for subordinated bonds issued by financial holding companies, once again demonstrating KB Financial Group’s excellent creditworthiness and capital adequacy."

Through this subordinated bond issuance, KB Financial Group’s BIS capital adequacy ratio is expected to improve from a provisional 14.48% at the end of last year to 14.64% after issuance, an increase of 16 basis points, further strengthening capital adequacy, KB Financial anticipated.

A KB Financial official said, "We will continue to enhance market trust based on systematic capital management and the highest level of capital adequacy in the country, and will do our best to further increase shareholder value."

This content was produced with the assistance of AI translation services.