The Export-Import Bank of Korea (Kexim) is constantly looking at different markets and currencies for funding purposes, Hee-Sung Yoon, director general of international finance department at Kexim, said on Wednesday.
Yoon, speaking at FinanceAsia’s annual Borrowers & Investors Forum, Southeast Asia, in Singapore, said the proportion of non-dollar funding has been quite substantial over the past few years and plans to continue its strategic diversification into other local currencies.
“We try to look at pockets of opportunities for local currency funding and I must say that we have been quite successful in our ventures so far,” said Yoon. “The most resilient dollar funding can sometimes shut itself down for a period of time, and in contrast some of the smaller markets can prove surprisingly active even in times of distress.”
Based on Kexim’s loan growth and redemption profile, it needs to raise approximately $11 billion-$12 billion next year via both G3 and local currency markets, adds Yoon.
“Our funding portfolios [are] well balanced between dollar and other currencies, which shows our efforts to find funding alternatives in various markets and currencies across the world,” said Yoon.
Kexim, which is rated on par with the Korean sovereign, has adequate support from the government. For example, it receives solvency guarantees as well as ongoing capital injections from the government, which give investors comfort, notes Yoon.
These two factors, combined with the likelihood of privatisation, differentiate Kexim from other issuers in Korea, he adds. This is why it is able to fund itself in excess of $10 billion in international markets every year at possibly the lowest cost of borrowing next to the sovereign.
Since Kexim’s inception 37 years ago, the organisation has tapped 27 different markets for funding and, as a result, has established its position as Korea’s benchmark issuer across the region.
This year alone, Kexim has made its bond debut in the British pound local currency market. It also seized the opportunity to tap the euro, Aussie dollar, Mexican peso, Japanese yen, Thai baht and South African rand.
“While some issuers use the local currency markets for opportunistic funding, we take a much longer perspective,” said Yoon. “We do regular roadshows in local markets to update local investors and try to return with a new offer as often as we can. This allows us to return to the market easily and borrow at competitive rates.”
Kexim, one of the most frequent issuers in the region, is ranked 28th in the world in terms of frequency of issuance in the international capital markets, ahead of JPMorgan and Citi, highlights Yoon. In terms of volume, it is ahead of many financial institutions including Deutsche Bank.
Kexim is rated AA3 by Moody’s, A+ by Standard & Poor’s and AA- by Fitch.
