Kookmin Bank raises US$1 bln via sale of covered bonds

SEOUL, May 7 (Yonhap) -- South Korea's top lender Kookmin Bank said Thursday it
has raised US$1 billion by selling so-called covered bonds, becoming the first
commercial bank in Asia to sell such debt this year.
The five-year bonds were sold at an interest rate of 7.25 percent, or 5.5
percentage points higher than the corresponding benchmark U.S. Treasury,
according to the lender.
Covered bonds are debts typically backed by mortgages and public sector lending
and unlike mortgage-backed securities, their underlying assets remain on the
balance sheet of the issuer.
Kookmin Bank's covered bonds this time were backed by home loans and credit card
receivables originated in South Korea.
The debt was rated 'AA' by Standard & Poor's, and 'A2' by Moody's Investors Service.
"The bond sale comes as the overseas financial market remains difficult," the
lender said in a statement, adding that the high interest of investors
underscores their trust in the fundamentals of Kookmin Bank.
Bracing for rainy days, South Korean banks are making their own efforts to borrow
from overseas to secure more foreign currency liquidity as the once-frozen credit
markets are showing signs of thawing.
Korean banks, saddled with high overseas short-term borrowing, had been suffering
from dollar shortages sparked by the failure of Lehman Brothers last year.
Korea Exchange Bank, controlled by U.S. buyout fund Lone Star Funds, said
Wednesday that it has secured 80 million euro (US$106.3 million) in foreign loans
to service trade financing.
In April, the South Korean government also issued $3 billion in
dollar-denominated currency stabilization bonds, the first state debt sale since
November 2006.
sooyeon@yna.co.kr
(END)