HF issued an offshore covered bond at a record-low interest rate
- Date 2015-11-25
- Views 635
HF issued an offshore covered bond at a record-low interest rate
- USD 500 million covered bond with a spread of the 5-year US treasury rate + 0.9%p
- A ceremony held in London on the 24th to commemorate its 4th covered bond issuance
Korea Housing Finance Corporation (HF, CEO Kim Jae-Chun) announced on the 25th that it held a ceremony
in London on November 24, 2015 (London time) to celebrate its issuance of an overseas covered bond
<see the image below>.
* Covered bonds are debt instruments issued by financial institutions and backed by assets held by the issuing
institutions. Though similar to mortgage-backed securities in that they are secured by a pool of assets,
covered bonds have dual recourse to both the issuing bank and the cover pool, thus making them less risky
compared to similar asset-backed securities.
The ceremony commemorated HF's successful issuance on the 19th of a USD 500 million global covered bond
with a maturity of five years and at a coupon rate of 2.50%. Various institutions such as asset management firms;
central banks; sovereign funds; insurers; and banks in the United States, Europe, Asia, and other regions bid for
the covered bond. The spread was set at 0.90%p higher than the five-year U.S. treasury rate, marking the lowest
level since HF began issuing offshore covered bonds.
An HF official said, “We will continue to issue these debt instruments in response to strong interest by overseas
investors and as part of our efforts to diversify funding sources." He also added, “It is expected that they can be
used as one of the funding options for the government in its efforts to increase the proportion of long-term,
fixed-rate amortizing mortgage loans in order to address the nation's rising household debt.”
<Image Description>
HF CEO Kim Jae-Chun (second from the left) held a ceremony to celebrate HF's 4th Global Covered Bond Issuance
in London on the 24th at 10:00 am (London time). The ceremony was also attended by Fabrice Susini, Global Head
of Securitization at BNP Paribas, Catherine Bouvier d'Yvoire, Managing Director of Public Sector and Development
Organizations at Standard Chartered Bank, and Demetrio Salorio, Global Head of Debt Capital Markets at Societe
Generale. In its 4th issuance, a USD 500 million covered bond was issued with a maturity of five years
and at a coupon rate of 2.50%.
