Government to Issue Australia's First Ever AUD-Denominated Foreign Exchange Bond

Selection of Agency for Issuance of Foreign Exchange Bonds Denominated in Australian Dollars Completed

The government will issue foreign exchange stabilization bonds (Oe-pyeong-bond) denominated in Australian dollars for the first time ever.

On the 8th, the Ministry of Economy and Finance announced that it had selected three financial institutions?ANZ (Australia and New Zealand), Mizuho, and Nomura?as agents for the issuance of Australian dollar-denominated Oe-pyeong-bonds.

Through this issuance, the Ministry plans to expand the global investor base for Korean bonds. The Ministry stated, “Since Korea was recently included in the World Government Bond Index (WGBI), investment conditions have significantly improved, making this an opportune time to discover new investment demand. We expect that the government’s direct issuance of bonds in a new overseas market will serve as a good opportunity for this purpose.” It is known that Australia hosts numerous high-quality investors, including various pension funds and global asset management firms.

Following last year’s issuance of yen-denominated bonds, this year’s issuance of bonds in a new currency, the Australian dollar, is expected to further strengthen the primary function of Oe-pyeong-bonds by providing a benchmark interest rate that allows domestic companies and financial institutions to raise funds in the respective currency at a lower cost. Until now, the government has made efforts to diversify Oe-pyeong-bond currencies by issuing bonds denominated not only in US dollars but also in euros, yuan, and yen.

As this is the first attempt to issue Australian dollar bonds, the government has begun preparations to ensure the issuance is successful. Prior to issuance, an in-person investor briefing session targeting investors in the Australian region is scheduled, and if necessary, non-face-to-face promotional methods such as the Global Investor Call (GIC) targeting investors worldwide will be actively utilized.

The Ministry of Economy and Finance stated, “Considering the remaining risk factors such as major countries’ monetary policy shifts, the impact of the US presidential election, and instability in the Middle East, we will communicate with market participants and closely monitor trends in the international financial market and bond issuance market on a daily basis.”