The Export-Import Bank of Korea (Korea Eximbank) announced on April 1 that it has signed a memorandum of understanding (MOU) for financial cooperation with the Indonesian sovereign wealth fund Danantara.
The agreement was signed during a summit between President Lee Jae-myung and Indonesian President Prabowo Subianto, who was on a state visit to South Korea.
Korea Eximbank President Hwang Ki-yeon and Rosan Roeslani, CEO of Danantara Sovereign Wealth Fund exchanged agreement documents in the presence of the two leaders.
Through this agreement, Korea Eximbank and Danantara selected core minerals, energy (power generation and power grids), data centers, transportation infrastructure, water treatment, and waste-to-energy conversion as six key areas of cooperation and agreed to cooperate closely throughout the entire process from project development to financial support.
In particular, Korea Eximbank will focus its capabilities on expanding opportunities for Korean companies by obtaining information on key local projects early through its partnership with Danantara.
In addition, with respect to existing or newly launched projects, there are plans to support the competitiveness of Korean companies in securing orders by providing customized financing through a K-Finance package which links various policy financial instruments, such as export finance, investment, and the Supply Chain Stabilization Fund.
The two organizations agreed not to limit the scope of cooperation to Indonesia, but to keep open the possibility of joint entry into Indonesia’s neighboring countries, such as member countries of the Association of Southeast Asian Nations (ASEAN).
Through this, the partnership is expected to contribute to Korean companies expanding their business scopes throughout Southeast Asia using Indonesia as a base.
“Indonesia is one of the most important partner countries in terms of the Korean government’s ‘Global South strategy’ and supply chain security,” President Hwang said.
“By actively utilizing the network with Danantara established through this MOU, Korea Eximbank will play a leading role in securing new orders for Korean companies and key minerals for them.”
Issuance of Global Bonds Worth $500 Million for Supply Chain Stabilization Fund
Korea Eximbank announced on April 2 that it successfully issued the first foreign currency bond (global bond) of the Supply Chain Stabilization Fund to strengthen the resilience of domestic supply chains, despite the recent situation in the Middle East.
The Supply Chain Stabilization Fund is a fund established at Korea Eximbank pursuant to the Framework Act on Support for Supply Chain Stabilization for Economic Security as part of a pan-governmental preemptive response system to the restructuring of global supply chains.
The bond issued this time is a foreign currency bond guaranteed by the government of the Republic of Korea, with an issuance size of $500 million and a maturity of 5 years.
The issuance rate was determined by adding 0.27 percentage points to the 5-year U.S. Treasury yield.
The secured funds will be prioritized for the ‘Middle East Damage Response Special Support Program’ for Korean companies facing difficulties due to the recent geopolitical crisis originating from the Middle East.
Through this, the fund will serve as a financial safety net by providing intensive support to sectors with a strong need for policy assistance such as stabilizing the supply of economic security items highly dependent on the Middle East and securing alternative import sources.
A notable point in this issuance process is that Korea Eximbank successfully attracted robust investment from global investors based on the Korean government’s top-tier credit rating.
Despite a significant increase in financial market volatility due to the recent heightened geopolitical tension in the Middle East, the fund was able to confirm investors’ strong trust by emphasizing the Korean government’s supply chain crisis management capabilities and the importance of the Supply Chain Stabilization Fund.
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