Card Companies Consider Foreign Debt Issuance as Exchange Rate Surges: "Positive If Interest Rates and Investor Demand Align"

Industry Expects Policy Direction to Become More Favorable
Watching for Falling Overseas Interest Rates and Rising Investor Demand
Hyundai Most Proactive; Shinhan, Woori, Hana Also Considering

As the USD-KRW exchange rate surged, it has been revealed that many credit card companies are considering issuing foreign debt. The intention is to actively secure funding through foreign debt issuance if signs such as lower interest rates in overseas markets and increased investor demand are detected. Credit card companies and other specialized credit finance companies, which have been struggling due to the rise in the rates of their main funding source-credit finance bonds-to the mid-3% range, believe that increasing foreign debt issuance could help diversify their risks.

On the 26th, amid the government's strong response, the USD-KRW exchange rate is rapidly falling, and the rates are displayed on an electronic board at a currency exchange street in Myeongdong, Jung-gu, Seoul. 2025.12.26 Photo by Dongju Yoon

According to the financial sector on January 22, seven major standalone credit card companies-Samsung, Shinhan, Hyundai, KB Kookmin, Woori, Hana, and Lotte Card, excluding BC Card, which has little demand for overseas funding-are closely monitoring exchange rate trends and government policies while seeking various ways to diversify funding, including foreign debt issuance. The previous day, the USD-KRW exchange rate closed at 1,471.3 won in the Seoul foreign exchange market, down 6.8 won from the previous trading day. This represents a 2.2% (31.8 won) increase compared to the same period last year.

Recently, the government has been considering measures such as having the National Pension Service issue foreign debt to defend against the sharp rise in the exchange rate and to diversify risks. This is because issuing bonds overseas and converting the dollars into won during periods of rapid exchange rate increases can boost demand for the won, thereby leading to a decline in the exchange rate (appreciation of the won).

Credit card companies have continued to expand their funding sources, including foreign debt, in preparation for industry downturns and economic recessions. The total amount of asset-backed securities (ABS), overseas dollar-denominated bonds, syndicated loans, ESG (environmental, social, and governance) bonds, and Kimchi bonds issued by the seven major credit card companies from 2023 to last year over the past three years amounts to approximately 19.2355 trillion won.

Hyundai Card has shown the most aggressive approach in the industry, resuming the issuance of Kimchi bonds worth 20 million dollars (about 2.94 billion won) on January 19. This marks the first Kimchi bond issuance in 15 years since investments in Kimchi bonds for the purpose of won currency exchange were restricted in 2011. Kimchi bonds refer to foreign currency-denominated bonds issued by domestic or foreign companies in the Korean market.

Hyundai Card is currently the most active participant in planning foreign currency borrowing, including Kimchi bonds, while Shinhan, Woori, and Hana Card have also established policies to consider issuing foreign currency bonds. Samsung, KB Kookmin, and Lotte Card have not set specific plans but are closely monitoring market conditions. In particular, Lotte Card is considering issuing ABS worth 300 million dollars (about 450 billion won).

However, the higher interest rates on foreign debt compared to domestic bonds remain a burden. Some urge caution, suggesting that it is preferable to proceed with issuance only after confirming strong investor demand. Seo Jiyong, Professor of Business Administration at Sangmyung University, advised, "Unlike in the past, financial authorities are now likely to take a favorable view of foreign debt issuance. Credit card companies should actively secure funding methods other than credit finance bonds by leveraging macroeconomic conditions."

An official from a credit card company stated, "We expect financial authorities to implement foreign currency funding policies flexibly in the future to improve foreign currency liquidity and ease downward pressure on the won." Another official emphasized, "Bringing in overseas funds through foreign debt issuance, such as Kimchi bonds, is not only helpful in stabilizing the exchange rate but is also positive for companies in terms of diversifying funding sources."