The Export-Import Bank of Korea announces its ESG management roadmap on July 1 to mark the 45th anniversary of its foundation and began full-fledged ESG management. (Center) Bang Moon-kyu, president of Korea Eximbank. (Photo: Korea Eximbank)

The Export-Import Bank of Korea (Korea Eximbank), announced on June 23 that it successfully issued a total of $2 billion worth of bonds to investors around the world.

The global bonds were issued in a triple tranche structure in fixed rates, consisting of $7.5 billion in three-year maturity, $7.5 billion in 5.5-year maturity and $500 million in 20-year maturity bonds.

The 20-year bonds marked the longest dated paper from a Korean financial institution.

Long-term bonds can be issued when there is mid- to long-term confidence in the economic fundamentals of the issuing country as well as the financial stability of the issuing institution.

“Korea Eximbank’s successful issuance of the 20-year long-term bonds is significant in that it reaffirmed solid credibility in the Korean economy and Korea Eximbank from global investors,” a Korea Eximbank official said.

To date, the longest dated notes sold by Korea Eximbank were in 10 years. With the successful issuance of the 20-year bonds, Korea Eximbank is considered to have a complete representation of the yield curve covering short to long terms.

Based on the data, Korean Eximbank can calculate competitive interest rates reflecting market conditions for Korean companies participating in large overseas projects that require longer-term financing for more than 10 years.

The Bank decided to raise the offering to $2 billion after receiving $5.4 billion worth of orders from investors during its book-building session, nearly 3.6 times more than its initial offering of $1.5 billion.

The strong demand for the long-term bonds reflects Korea's relatively sound economic fundamentals due to its outstanding export performance in key sectors, despite the global spread of COVID-19.

“We spotted the signs of change in the financial market and launched the deal in a timely manner in order to preemptively secure long-term low-cost foreign currency funds,” the official added.

Prior to this issue, Korea Eximbank carried out a virtual one-on-one investor briefing session for conservative investors seeking ultra-high-quality bonds with AA ratings or higher.

As a result, for then three-year and 5.5-year maturity bonds, 58 percent of the investors were central banks, sovereign wealth funds and international organizations, attracting strong demand.

 In particular, for the 20-year maturity bonds, the proportion of investors seeking long-term stable investment sources, including pension funds, insurers, and asset managers, exceeded 74%, contributing to diversifying the investor base.

As Korea’s leading foreign currency borrower, Korea Eximbank plans to diversify its borrowing methods and actively attract blue-chip investors with the goal of issuing 11 billion dollars of foreign bonds this year.

In the meantime, Korea Eximbank announced on July 21 that it has banded together with Abu Dhabi National Oil Company (ADNOC) to help Korean firms land more orders from the Middle East.

ADNOC is the state-owned oil company of the United Arab Emirates (UAE). It is the world's 12th largest oil company by production, producing 3.1 million barrels per day.

It is the UAE’s largest oil company and one of the world’s largest energy companies measured by both reserves and production.

President Bang met with Dr. Sultan Ahmed Al Jaber, chairman of ADNOC at the ADNOC Headquarters in Abu Dhabi on July 20th (local time) and signed a financial cooperation agreement for a US$5 billion framework agreement with ADNOC.

The agreement also includes Korea Eximbank providing financing services when Korean companies win orders for large-scale projects from ADNOC this year.

“We hope that this meeting between Korea Eximbank and ADNOC, an important and valuable partner of Korean companies, will strengthen cooperation between the two and contribute to Korean companies taking orders by utilizing Korea Eximbank’s various financial means,” Bang said.

Recently, financing has grown in importance when Korean companies compete to win orders as securing financial tools is put before placing orders.

Under the deal, Korea Eximbank will provide a mid- to long-term framework agreement directly to ADNOC, which will empower Korea Eximbank to provide financial supports tailored to various types of transactions including export transactions and imports of major resources.