KB Kookmin Bank Issues First 500 Million Euro Covered Bond Among Domestic Commercial Banks

[Asia Economy Reporter Kangwook Cho] KB Kookmin Bank announced on the 9th that it has successfully issued a 5-year global covered bond worth 500 million euros.

This issuance is the first euro-denominated covered bond (dual recourse bond) issued by a domestic commercial bank. The issuance rate was set at an annual 0.052%, which is 40 basis points above the 5-year euro swap rate, and it will be listed on the Singapore Exchange.

In particular, it received the highest credit rating of 'AAA' from international credit rating agencies S&P and Fitch, recognizing its high creditworthiness and stability. As a result, it attracted strong demand from major investors in the European market and was a success. The final spread was set at 40 basis points, nearly 10 basis points lower than the initially proposed rate (initial guidance), securing orders exceeding 2 billion euros, and the coupon rate was fixed at 0.052%, close to zero interest rate level.

Since the enforcement of the "Act on the Issuance of Dual Recourse Bonds" (Covered Bond Act) in 2014, KB Kookmin Bank has established itself as a major issuer in the global market by issuing the first domestically legislated non-dollar and won-denominated covered bonds, and now also the first euro-denominated covered bond. Including this issuance, KB Kookmin Bank has issued a total of 4 foreign currency covered bonds (USD 1.1 billion, EUR 500 million) and 7 won-denominated covered bonds (2.12 trillion won) under legislation.

The funds raised through this issuance, structured as sustainable bonds, will be used for eco-friendly and social problem-solving purposes under the "Sustainable Finance Management System." In particular, KB Kookmin Bank plans to use part of the raised funds for COVID-19 related financial support.

A KB Kookmin Bank official said, "This issuance is the first and only euro-denominated covered bond based on the domestic 'Dual Recourse Bond Act,' attracting high interest from European investors, the home of covered bonds, and was issued at the lowest interest rate level among foreign currency public bonds issued by commercial banks to date." He added, "It is a great achievement that KB Kookmin Bank's traditional strength in the housing finance market has been recognized in the European market as well."

This issuance was led by BNP Paribas, Citigroup, CA-CIB, HSBC, JPMorgan, and Soci?t? G?n?rale as joint lead managers, with KB Securities acting as co-manager. The investor composition by region was 87% Western Europe, 11% Eastern Europe, and 2% Asia; by institution type, asset management companies accounted for 55%, banks 19%, central banks and government agencies 14%, insurance and pension funds 10%, and private banking and others 2%.

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