South Korea issues its first yuan-denominated sovereign bonds

South Korea Finance

Dec 16, 2015 (LBO) – The South Korean government has issued its first ever yuan-denominated sovereign bonds in China’s onshore bond market.

This sovereign bond issue is expected to contribute to diversifying the currency composition of Korea’s foreign exchange reserves and further China’s efforts to open its capital markets to the world.

“The bond issuance was a great success, drawing orders of more than 4.3 times the amount offered,” country’s Finance Ministry said.

“Many investors were of the view that the issuance timing was very appropriate given the ample liquidity in the Chinese bond market and the yuan’s recent inclusion in the SDR currency basket.”

The Korean government sold the 3.0 billion Yuan, 3 year bond at 3.0 percent, the lowest end of its 3.0-3.5 percent range of price guidance.

The 3.0 percent interest rate was lower than the rates of other bonds issued by prominent financial institutions.

“This issuance sets an important benchmark for other Korean issuers to enter China’s onshore bond market and further diversify their funding sources.” the Finance Ministry further said.

The government conducted one-on-one meetings as well as a presentation for a large group of investors in Shanghai and Beijing, in order to showcase the Korean economy and explain the purpose of yuan-denominated sovereign bond issuance.