BNK Gyeongnam Bank Issues 150 Billion Won Covered Bonds, First Among Regional Banks

Participating in the Government's Household Debt Stabilization Policy
Issued Based on a Payment Guarantee from Korea Housing Finance Corporation

BNK Gyeongnam Bank announced on November 4 that it has become the first regional bank to issue 150 billion won worth of covered bonds (dual recourse bonds, 5-year maturity).

BNK Gyeongnam Bank Headquarters.

This issuance marks the first time a regional bank has upgraded its credit rating (from AA+ to AAA) through a payment guarantee from the Korea Housing Finance Corporation to issue covered bonds. It is expected to reduce funding costs by approximately 10 basis points (0.1%) compared to ordinary bonds.

Additionally, as the funds are raised through a long-term instrument with a 5-year maturity, the bank expects to expand the supply of long-term fixed-rate mortgage loans, contributing to the qualitative improvement of household debt structure.

Lee Junghoon, Head of the Treasury Department, stated, "In order to actively participate in the government's household debt stabilization policy, we have become the first regional bank to issue covered bonds worth 150 billion won. We expect that expanding BNK Gyeongnam Bank's mid- to long-term housing finance supply will help stabilize housing for ordinary citizens."

Meanwhile, covered bonds are secured bonds issued using high-quality assets (such as mortgage loans) held by the issuer as collateral. For investors, they guarantee preferential repayment rights to the collateral assets, while also granting the right to claim principal and interest payments from the issuing institution-hence, they are dual recourse bonds.

In other words, covered bonds offer increased stability for investors and enable issuing institutions to reduce funding costs.