"First Case Since Regulatory Easing for Won Conversion"
"Diversifying Funding Methods... Securing Stable Liquidity"
Hyundai Card announced on January 19 that it has issued a "Kimchi Bond" worth 20 million dollars (approximately 29.4 billion won). A Kimchi Bond is a foreign currency-denominated bond issued by domestic or international companies in the Korean market.
The bond issued this time is a single tranche with a one-year maturity. The issuance rate was set at the Secured Overnight Financing Rate (SOFR), which is a risk-free benchmark rate backed by U.S. Treasury bonds, plus a spread of 60 basis points (1bp=0.01 percentage points).
This issuance marks the first case since June of last year, when Kimchi Bonds for the purpose of Korean won conversion became possible, that a domestic company has successfully completed a public offering.
Since 2011, after investments by foreign exchange business institutions in Kimchi Bonds for the purpose of Korean won conversion were restricted, issuances in the market had been suspended. Hyundai Card has now resumed Kimchi Bond issuances after a 15-year hiatus.
The Bank of Korea promoted the activation of Kimchi Bond issuances last year as a way to reduce imbalances in the foreign exchange market and ease downward pressure on the Korean won. It also relaxed investment regulations on Kimchi Bonds intended for Korean won conversion.
Hyundai Card explained that this issuance will allow it to further diversify its funding channels.
The company has been striving to create a stable funding environment by diversifying foreign currency-based funding methods, including overseas dollar-denominated bonds, syndicated loans, and asset-backed securities (ABS).
A Hyundai Card official stated, "For specialized credit finance companies, diversifying funding sources in response to various domestic and international environmental changes has become an essential task," adding, "We proactively promoted the issuance of Kimchi Bonds to secure stable liquidity."
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