LH Issues €50 Million in 15-Year Euro-Denominated Bonds

[Financial News] By securing 15-year euro funding at a lower interest rate than domestic won-denominated bonds, Korea Land and Housing Corporation (LH) is accelerating efforts to broaden its overseas funding channels. Euro-denominated private placements typically have maturities of three to five years, making a 15-year issue by a Korean institution rare even in global bond markets. LH plans to issue a dollar-denominated public bond this month.
According to LH on the 22nd, the corporation finalized the previous day the issuance of euro-denominated bonds worth €50 million (about 74.5 billion won). The final interest rate, converted into won after accounting for currency swaps, is 4.297%. That is 0.10 percentage points lower than the rate it would pay on won-denominated bonds issued domestically, reducing interest costs.
The deal came about at the request of high-quality investors in Europe. It is a follow-on issuance after LH issued its first euro-denominated public bond last November, worth €500 million (about 849.3 billion won at the time). The company's high credit ratings from Moody's (Aa2), S&P (AA) and Fitch (AA-), along with LH's standing as a policy institution, are seen as having translated into overseas demand and investor confidence.
LH's first euro-denominated public bond, issued last year, had a three-year maturity, with its interest rate set at 0.37 percentage points above the three-year euro mid-swap rate. At the time, 41 institutions worldwide placed orders totaling 2.2 times the offering amount. This year, LH has also issued three-year bonds worth 100 million Swiss francs (about 188.2 billion won) in April and 500 million Australian dollars (about 537.5 billion won) in May. The Australian-dollar bond was the first of its kind issued by the corporation. This time, it has substantially extended the maturities of its overseas bonds, previously focused on three-year issues, to 15 years. LH plans to raise a total of 20 trillion won this year and raised 1.2 trillion won through overseas bonds in the first half alone.
The corporation sees the significance of this issuance in securing medium- to long-term funding that can support policy projects over an extended period. It also helps spread out debt maturities so they do not cluster around a particular date, the corporation said.
LH is continuing to expand the currencies in which it raises funds. After issuing bonds denominated in Australian dollars, Japanese yen and Canadian dollars, it plans to issue a dollar-denominated public bond this month. Its aim is to strengthen its overseas investor base by broadening the range of currencies and maturities.
An LH official said, “The proceeds from this bond issuance are planned to be used for LH's key policy projects, including public housing construction, to help expand housing supply,” adding, “We will continue to actively diversify our overseas funding sources and build a foundation for the stable implementation of policy projects.”

[email protected] Jeong Gyeong-su Reporter