Overseas Bond Issues Gather Speed
By Park Hyong-ki
Staff Reporter
Korean companies and financial firms are raising a greater amount of funds in overseas by issuing bonds and tapping syndicated loans, tapping loans at lower borrowing costs, according to the Korea Center for International Finance (KCIF).
Firms have raised a total of $17.6 billion in the first four months of the year, up 28 percent from a year earlier through bond issuances and syndicated loans abroad.
It is the biggest capital increase for Korean entities for the first four months. They raised $10.2 billion by selling bonds abroad and $7.4 billion via syndicated loans from a group of overseas financial firms.
Domestic banks and other investment firms took up the lion's share in fund-raising overseas at $9.7 billion, accounting for 55 percent of the total.
In particular, an increasing number of credit card companies, which used to rely on syndicated loans, advanced into overseas bond markets to raise funds.
Shinhan Card and Hyundai Card each raised $400 million through collateral-free bond issuances in the first half of this year, according to the KCIF. Woori Bank raised $1 billion by selling bonds overseas.
Global syndicated loans and floating-rate loans accounted for 62 percent or $10.9 billion of the total funds raised, while fixed-rate debt took up 33 percent at 5.8 billion won.
With credit improvement at Korean banks and companies after restructuring in the wake of the financial crisis in the late 1990s, foreign investors are positive about lending money to domestic entities.
``Chances are high that banks' financing in offshore capital market will increase on expectations of an economic rebound, set off by recovering consumption and stronger industrial output,'' the Center said. ``Foreign financial firms seem optimistic about the Korean economy.''
Of the funds, dollar-denominated borrowings accounted for 70 percent, with the yen and euro accounting for 10 percent. The remaining loans were for other currencies.