Hyundai Capital said Thursday it has issued South Korea’s first publicly offered offshore yuan-denominated kimchi bond by a financial institution.
The 660 million yuan ($95.6 million) notes carry a two-year maturity and a coupon of 2.2 percent. KB Securities acted as lead manager.
Kimchi bonds are foreign-currency debt sold in Korea’s domestic capital market, allowing issuers to tap local investors for overseas funding. The deal marks the first public offering of a yuan-denominated kimchi bond. A Korean financial institution previously issued a yuan-denominated kimchi bond through a private placement in 2014.
Hyundai Capital said the issuance comes as local authorities ease foreign exchange regulations. Last year, the central bank lifted restrictions on kimchi bond investments by foreign exchange banks for the first time in 14 years to help revive the market amid global currency volatility and concerns over Korea’s foreign currency liquidity.
Issuance has accelerated this year. Including Hyundai Capital’s $50 million kimchi bond sold last month, four domestic institutions have raised a combined $380 million through such notes so far.
The yuan-denominated sale also marks a step toward diversifying funding beyond the US dollar. Hyundai Capital said the transaction allowed it to tap liquidity in the rapidly expanding offshore yuan market.
“It carries deeper significance as the deal was completed despite heightened volatility in global funding markets following the recent escalation of conflict in the Middle East,” said Chief Financial Officer Lee Young-seok.
The issuance underscores the firm’s ability to access capital markets even during periods of uncertainty, Lee said, adding the company planned to continue expanding funding channels as authorities move to ease kimchi bond regulations to stabilize foreign-currency liquidity.
jwc@heraldcorp.com
