Shinhan Bank Issues $400 Million Kangaroo Bonds

[Asia Economy Reporter Kangwook Cho] Shinhan Bank announced on the 23rd that it has issued a 5-year foreign currency Kangaroo social bond worth AUD 400 million (approximately USD 290 million).

Named as a bond to support COVID-19 relief, this bond is the first domestic environmental, social, and governance (ESG) Kangaroo bond specifying the use of proceeds for supporting companies affected by COVID-19 and activities to prevent the spread of COVID-19. Kangaroo bonds refer to bonds issued in Australian dollars by foreign institutions offshore in the Australian capital market.

This bond was issued in two parts: a floating rate bond (USD 250 million) and a fixed rate bond (USD 150 million). The interest rate for the floating rate bond was set at 3-month BBSW plus 0.88%, and the fixed rate bond was set at an annual rate of 1.183%. The investor composition by region for the floating rate bond was 33% Australia, 66% Asia, and 1% Europe, while for the fixed rate bond it was 50% Australia, 48% Asia, and 2% Europe.

In particular, Shinhan Bank was able to reduce funding costs compared to issuing bonds in US dollars with the same maturity by being the first domestic commercial bank to obtain eligible collateral status for the Australian central bank (RBA) repo market before issuing the bonds, and it was also able to maximize participation from investors within Australia.

A Shinhan Bank official said, “Despite market uncertainties such as the resurgence of COVID-19 and delays in agreement on additional US economic stimulus measures, the successful issuance of Korea’s foreign exchange bonds at low interest rates earlier this month greatly helped reduce the issuance rate of this bond,” adding, “The funds raised through this issuance will be used to provide financial support to small business owners and small and medium-sized enterprises directly or indirectly affected by COVID-19.”

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