By Lee Hyo-sik
Staff Reporter
State-run banks and commercial lenders here are gearing up to issue bonds overseas to raise dollars on steadily improving global financial market conditions.
If they succeed in selling notes to foreign investors, it is expected to help ease the ongoing dollar shortage and boost the won's value against the greenback and other currencies.
The government's plan to sell dollar-denominated foreign exchange stabilization bonds worth at least $1 billion will likely help banks bring in dollars as the sovereign bond sets a standard yield for other locally issued bonds abroad.
According to the banking industry Friday, the Korea Development Bank (KDB), the Industrial Bank of Korea (IBK) and other state-owned banks have completed all the necessary preparations for issuing dollar-denominated bonds overseas. Kookmin Bank and other commercial banks are also ready to sell their notes to international investors as soon as market conditions improve.
The nation's largest retail lender recently held a series of road shows for European investors in a bid to test market sentiment. Last year, it also hosted investor relation sessions for Asian investors in Hong Kong and Singapore.
``We have issued short-term bonds to a limited number of investors over the past year to raise necessary capital. Now, we are preparing to sell mid-and long-term bonds to a large pool of investors. We have found that more investors have become interested in putting money into our notes,'' a Kookmin Bank official said, adding the bank plans to sell bonds as early as early next month.
Hana Bank is also trying to issue three-year maturity bonds worth $500 million this year with government payment guarantees. The yield has not been fixed yet but the nation's fourth largest bank wants to introduce market bonds this month.
Additionally, the IBK is considering issuing the five-year maturity bonds without state payment guarantees.
Analysts say domestic banks are beefing up efforts to raise money overseas, as the international financial market has shown signs of improvement in recent weeks, including falling bond yields.
They have been trying to raise dollars through bond issuance since last summer but have been largely unable to do so because of the ongoing global credit crunch. Following the demise of Lehman Brothers and American International Group (AIG)'s worsening liquidity shortage in September last year, the international bond market has come to a virtual halt, with investors not wanting to put money into bonds in emerging markets.
Following a $30 billion currency swap agreement with the United States in late October, some domestic banks successfully issued bonds abroad and brought in much-needed dollars. But again, financial firm faced difficulty in borrowing money from abroad on the deepening global credit woes in the wake of the credit crisis in Eastern Europe and crippling Citgroup, AIG and other big name U.S. financial firms.
But over the past week, the global financial market has stabilized to some extent, with domestic shares and the Korean won gaining upward momentum.
The won-dollar rate rose close to 1,600 won last week but has fallen back to below 1,500 won. The local bourse has rallied with the KOSPI bouncing back over the psychologically important 1,100.
leehs@hotmail.com
1![[ANALYSIS] Tesla, BYD's price cuts unnerve LGES, Samsung, SK](https://img.koreatimes.co.kr/upload/thumbnailV2/b1cf8ba68d474cb69352bfe7ea9d14f0.jpg/dims/resize/178/optimize) | ANALYSISTesla, BYD's price cuts unnerve LGES, Samsung, SK |
![[INTERVIEW] How ATEEZ achieved worldwide success](https://img.koreatimes.co.kr/upload/thumbnailV2/c7723b56dde94eb4b260950d368fe8fb.jpg/dims/resize/178/optimize)
