Korea Development Bank Issues $200 Million SOFR Bonds "Expected to Serve as Benchmark"

Utilizing Momentum from Successful Government Foreign Currency Bond Issuance
Successful Issuance of $200 Million SOFR Bonds
Benchmark Role for Other Institutions' SOFR Bond Issuance

[Asia Economy Reporter Kangwook Cho] The Korea Development Bank announced on the 14th that it issued $200 million worth of SOFR bonds in the U.S. bond market.

SOFR is the one-day repurchase agreement (Repo) rate secured by U.S. Treasury bonds and is presented as the alternative benchmark interest rate in the U.S. market for LIBOR, which is scheduled to be discontinued by the end of next year.

The bank explained that in preparation for the discontinuation of LIBOR at the end of 2021, it has been preparing the necessary infrastructure related to alternative benchmark rates such as SOFR and closely monitoring the market. Taking advantage of the timely opportunity, it issued SOFR floating rate bonds this time.

A bank official said, "On the 9th, the Government of the Republic of Korea issued foreign exchange stabilization bonds worth $1.45 billion (700 million euros, 625 million dollars) at historically low interest rates, confirming positive investment sentiment from global investors toward Korean bonds," adding, "It is expected to contribute to the smooth foreign currency fund raising of private and public institutions in the future."

The bank issued the first SOFR-linked foreign currency bonds in Asia in the U.S. market and expects this to have a positive impact on the global bond issuance scheduled for the fourth quarter of this year.

Additionally, through this issuance, it is expected to contribute to the entry of Korean institutions into various bond markets and create favorable conditions for institutions when borrowing overseas.

A bank official emphasized, "This SOFR bond can be used as a reference case for institutions preparing for the introduction of SOFR and the issuance of SOFR-based floating rate bonds," and added, "We will continue to strive to present favorable benchmarks for Korean institutions in the future."

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