Shinhan Bank Successfully Issues 500 Million Euro Covered Bond

The Nation's First Issuance of 'Green Mortgage' Type

Shinhan Bank announced on the 23rd that it successfully completed a public issuance of foreign currency covered bonds worth 500 million euros (approximately 730.2 billion KRW).

Covered bonds are bonds issued with high-quality assets held by the issuing institution as collateral, granting investors priority repayment rights on the collateral and dual recourse claims against the issuer. This covered bond is a 3-year fixed-rate bond with a coupon rate set at 3.32% per annum, which is the euro swap rate plus 54 basis points (1bp=0.01%).

After experiencing deteriorated funding conditions due to tightening in domestic and international capital markets in 2022, Shinhan Bank established a continuous issuance framework for covered bonds to enhance the stability of foreign currency funding, and through this issuance, secured a new collateralized funding channel.

Prior to this, Shinhan Bank visited five major European cities including London, UK, and Paris, France, to explain the collateral assets and Environmental, Social, and Governance (ESG) format to key investors. As a result, the bank successfully completed the bond issuance at a rate lower than fair value without paying a new issuance premium, according to the bank.

This euro covered bond was issued in the form of a ‘Green Mortgage,’ which is the first in Korea to match and support funds for eco-friendly apartment housing mortgage loans.

A Shinhan Bank official stated, "This bond issuance is significant in that Shinhan Bank contributed to expanding the base for foreign currency covered bond issuance among domestic financial companies. In terms of interest rates, the issuance was achieved at a very competitive level compared to typical global bonds."