Industrial Bank Issues $1 Billion Global Bond

Confirmation of Recovery Trend in Korean Foreign Capital Procurement Spreads to Pre-COVID Levels

[Asia Economy Reporter Kangwook Cho] The Korea Development Bank (KDB) announced on the 20th that it has issued a total of 1 billion USD in global bonds targeting investors worldwide.

This bond was issued as a fixed-rate bond with a Dual-Tranche structure consisting of 500 million USD with a 3-year maturity and 500 million USD with a 5.5-year maturity. Dual-Tranche refers to the method of issuing two bonds simultaneously with different conditions such as maturity and interest rates.

The 3-year maturity tranche was issued as a social bond and will be used to support domestic companies struggling after the COVID-19 pandemic and to fund overseas projects. Social bonds are special-purpose bonds whose proceeds are used to fulfill corporate social responsibility.

In particular, KDB stated that through this issuance, it has confirmed that the foreign capital procurement costs of Korean institutions, which had surged after COVID-19, are recovering to pre-pandemic levels.

Since KDB’s global bond issuance in February, foreign currency borrowing by Korean entities was temporarily suspended due to the full-scale outbreak of COVID-19. Starting with KDB’s foreign currency bond issuance in April (500 million USD, 3-year maturity), the resumption of foreign currency bond issuance by Korean entities was initiated.

KDB took advantage of the increased demand for safe assets amid the recent resurgence of COVID-19 and growing uncertainties related to the US presidential election, attracting effective orders approximately 3.6 times the issuance amount.

More than 41% of the total orders came from policy financial institution investors such as central banks, sovereign wealth funds, and international organizations from various countries. Especially, investors from Europe/Middle East and the US accounted for over 76%, breaking away from the previous Asia-centric investor base, reaffirming the high interest and trust of global investors, KDB explained.

Furthermore, following the successful issuance of government foreign currency bonds in September, KDB expects that the smooth foreign capital procurement of domestic companies will be further facilitated with the successful completion of this global bond issuance.

A KDB official said, "Through this issuance, we expect to present benchmarks for 3-year and 5.5-year maturities, creating a favorable issuance environment for domestic institutions planning overseas bond issuance," adding, "As a leading policy financial institution, we plan to continue providing favorable benchmark interest rates for subsequent issuances by domestic institutions."

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