Maintaining the active deal flows in Asia’s G3 bond market, South Korean issuers raised a total of US$3 billion in three transactions on July 13, generating a warm market response.

This followed the successful return of the Korean sovereign in the euro bond market a week earlier, setting a new benchmark for Korean euro-denominated fund raising.

One of South Korea’s policy banks, the Export-Import Bank of Korea ( Kexim ), returned to the US dollar bond as it priced a dual-tranche offering totalling US$2 billion. The SEC-registered transaction is equally split at US$1 billion each for three years and five years. The three-year tranche is a green bond, which is priced at 99.711% with a coupon of 4.375%, while the five-year tranche is priced at 99.668% with a coupon of 4.50%.

The deal generated a combined order book of US$3.98 billion with the three-year green bond garnering demand worth US$2.1 billion from 68 accounts, while the five-year conventional bond attracted orders amounting to US$1.7 billion from 56 accounts.

Citi, Credit Agricole CIB, HSBC, J.P. Morgan and Morgan Stanley were the joint bookrunners and lead managers for the transaction.

Diversification strategy

The transaction makes Kexim the most frequent Korean issuer in the offshore bond markets this year, having previously accessed different markets to meet its funding requirements. It kicked off its bond issuance in January with a four-tranche offering totaling US$3.5 billion, including a green tranche amounting to US$1.25 billion for three years. It returned to the US dollar bond market in early April with a US$500 million deal that was guaranteed by the government for its supply chain resilience fund in accordance with the Supply Chain Stabilization Act.

Also in April, Kexim printed a five-year sustainability bond amounting to €750 million ( US$852.30 million ), after which it tapped the sterling bond market in early June with a £500 million ( US$666.67 million ) deal for three years as part of the diversification of its funding sources.

Korea Electric Power Corporation ( Kepco ) is also in the market this week, printing a dual-tranche green bond totalling US$700 million. The Reg S/144A deal consisted of a three-year floating rate note amounting to US$400 million and a five-year fixed rate note amounting to US$300 million. It generated a combined order book of US$2.5 billion from 157 accounts. BofA Securities, Citi, J.P. Morgan and HSBC acted as the joint bookrunners and lead managers for the deal.

Korean manufacturer and seller of tobacco and ginseng products KT&G Corporation also priced a US$300 million offering for 3.5 years, which garnered an order book of US$2 billion from 124 accounts. The Reg S-only deal was priced at 99.854% with a coupon of 4.875% to offer a yield of 4.921%. Citi, HSBC and UBS were the joint bookrunners for the transaction, the proceeds of which will be used for general corporate purposes.

These latest issuances came on the heels of the Republic of Korea’s ( RoK ) second foray in the G3 bond market this year. On July 9, the sovereign priced €1.7 billion in foreign exchange equalization fund bonds in two tranches: €700 million for three years with a coupon of 2.875% and €1 billion for seven years with a coupon of 3.25%.

Largest single sovereign issuance

The seven-year tranche represented the largest-ever single issuance by RoK in this market, surpassing the previous record of €750 million set in 2014, according to the Ministry of Finance and Economy ( Mofe ). By establishing a solid benchmark in the euro market, Mofe says the government has further strengthened the foundation for Korean issuers to raise foreign currency funding under more stable conditions. Citi, Crédit Agricole CIB, HSBC, J.P. Morgan and Korea Development Bank were the joint bookrunners for this transaction.

Both the three-year and the seven-year tranches achieved the lowest-ever spreads for their respective maturities, according to Mofe. Following the successful US$3 billion FX fund bond issuance in February this year, the sovereign likewise achieved new record-low spreads in the euro market, pricing the three-year and seven-year tranches at 15bp and 24bp below the previous record lows established in 2025.

With this transaction, Mofe says the government has completed its 2026 FX fund bond issuance programme totalling the equivalent of US$5 billion – the largest annual issuance of foreign currency FX fund bonds on record.