Busan Bank Issues 100 Billion KRW of New Hybrid Capital Securities

Annual 4.37%... Minimizing the Spread Gap with Commercial Banks

BNK Busan Bank announced on the 30th that it issued 100 billion KRW of Korean-style green bonds in the form of hybrid capital securities with a 5-year call option for early redemption, at an interest rate of 4.37% per annum on the 29th.

Busan Bank succeeded in attracting strong demand during the bond issuance demand forecast on the 18th, gathering a total demand of 336 billion KRW, three times the issuance amount. The issuance interest rate was fixed at 4.37% per annum based on the demand forecast results, and with the government bond yield set at 3.49% that day, the spread was determined to be 0.88 percentage points.

The 0.88% spread on Busan Bank’s hybrid capital securities is the lowest ever recorded among regional banks, and the difference in spread compared to commercial banks that issued bonds just before was only 0.03%, which is evaluated as significantly narrowing the gap with commercial banks in the capital market.

In particular, based on active communication with the underwriting consortium (Hanyang Securities, Kyobo Securities, Hana Securities, Hyundai Motor Securities), the bank explained that it issued hybrid capital securities as Korean-style green bonds for the first time in the banking sector, and adopted a monthly interest payment method, attracting interest from both institutional and retail investors.

The funds raised through this green bond issuance will be used to support environmental improvement facility funds such as waste treatment facilities and air pollution prevention facilities. Kim Cheong-ho, Head of the Treasury Market Division at Busan Bank, stated, “Despite the difficult environment, including the recent sharp rise in exchange rates due to Middle East war risks, we raised an amount exceeding market expectations, reaffirming Busan Bank’s position in the capital market. We will continue to be a trusted bank in the market through proactive capital expansion and stable ratio management.”