Jugeum Gong, Korea's First 7-Year Maturity Social Bond Issuance

Policy Mortgage Usage Reduces Housing Burden for Homeless Low-Income Citizens

Korea Housing Finance Corporation Headquarters Exterior View

[Asia Economy Reporter Kwangho Lee] Korea Housing Finance Corporation announced on the 21st that it has issued social bonds (social covered bonds) worth 55 million euros with the longest maturity ever of 7 years and an interest rate of 0.258%, which is the sum of the euro mid-swap rate (0.068%) and a spread (0.19%).

An official from the Housing Finance Corporation explained, "Despite the increased market volatility due to the end of quantitative easing measures by central banks of various countries and inflationary pressures, we succeeded in issuing bonds with the longest maturity ever," adding, "The government’s euro-denominated foreign exchange bonds (5-year) issued on the 6th with the lowest spread ever (13bp) seem to have had a positive impact on the issuance of covered bonds."

Through this issuance, the Housing Finance Corporation expanded its investor base, diversified issuance maturities, and established a long-term funding system. Additionally, this long-term issuance is expected to help reduce the circulating interest rates of existing 5-year bonds, expand market participation of commercial banks in covered bonds, and alleviate housing costs for low-income households without homes using policy mortgages such as the Bogeumjari Loan.

Choi Jun-woo, President of the Housing Finance Corporation, stated, "By issuing 7-year maturity long-term covered bonds, we will further strengthen our policy role to revitalize the covered bond market," and added, "Since overseas covered bond funding costs are about 1 percentage point cheaper than domestic ones, we are considering expanding the scale of overseas covered bond funding in the future."