Hyundai Capital Issues Yuan-Denominated Kimchi Bond, a First in the Financial Sector

Hyundai Capital announced on March 6 that it has successfully issued the first-ever "yuan-denominated Kimchi bond" in the domestic financial sector.

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The newly issued bond amounts to a total of 660 million yuan, with a maturity of two years and a coupon rate of 2.2%. KB Securities served as the lead manager for the issuance.

"Kimchi bonds" are foreign currency-denominated bonds issued in the Korean capital market, allowing companies to secure foreign currency liquidity by leveraging the domestic investor base. While there was a precedent for yuan-denominated Kimchi bonds issued by Korean financial institutions through private placement in 2014, this marks the first time such a bond has been issued through a public offering.

This yuan-denominated Kimchi bond issuance by Hyundai Capital is part of a proactive response in line with the government’s move to ease foreign exchange regulations. Last year, the Bank of Korea lifted a 14-year restriction on Kimchi bond investments by foreign exchange business operators. As global exchange rate fluctuations and domestic foreign exchange supply and demand issues have become more prominent, Kimchi bonds are gaining attention as an effective means of raising foreign currency funds.

So far this year alone, the Kimchi bond market has been gaining momentum, with four domestic institutions issuing a total of 380 million dollars’ worth of Kimchi bonds, including Hyundai Capital’s own 50 million dollar Kimchi bond issuance.

Lee Youngseok, Head of Finance at Hyundai Capital, stated, "The successful issuance of this Kimchi bond is especially meaningful, as we managed to proceed without hesitation even amid heightened volatility in the funding environment at home and abroad due to the sudden outbreak of war in the Middle East."

Lee added, "We plan to proactively support the government’s policy to ease regulations on Kimchi bonds for stable foreign currency supply," and continued, "Hyundai Capital will continue to develop new funding routes and methods in line with changes in the financial environment, thereby establishing a stable funding portfolio that can respond to any situation."

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