South Korea issues €1.4 billion in largest-ever euro bond sale

The country has about $1.9 billion remaining under the offshore bond sale quota for 2025

(Courtesy of Getty Images)
(Courtesy of Getty Images)
Yeonhee Kim 2
2025-06-27 11:42:56 yhkim@hankyung.com
Sovereign bonds

South Korea raised 1.4 billion euros ($1.6 billion) through a euro bond sale on Thursday, marking the country's largest-ever euro-denominated debt issuance and its biggest overall foreign currency bond deal in over a decade.

The issuance marked the country's first offshore bond sale since President Lee Jae-myung took office this month and its return to the euro bond market after a four-year hiatus.

The issuance was structured in two tranches: a 700-million-euro three-year note and a 700-million-euro seven-year note. according to the Ministry of Economy and Finance.

It represented South Korea's first euro-denominated dual tranche debt offering and the country's largest foreign bond sale since raising $1 billion through offshore bonds in 2014.

The credits saw overwhelming demand, attracting a record 19 billion euros in demand -- 13.6 times the issuance size. It marked the highest-ever subscription rate for the country's sovereign debts denominated in the euro.

(Courtesy of Getty Images)
(Courtesy of Getty Images)

TIGHT SPREADS

They were priced with tighter spreads than those for Japanese state-run financial institutions and Chinese sovereign debts in the secondary market, the ministry said.

The three-year bond was sold at a yield of 2.305%, which is 25 basis points over the euro mid swap rate of the same maturity, a benchark yield. It carries a coupon rate of 2.250%.

The seven-year tranche was issued at a yield of 2.908%, or 52 basis points over the euro mid-swap rate of seven-year notes. Its coupon rate was set at 2.875%.

The pricing is expected to serve as benchmark for South Korean companies in offshore funding.

The new issuance followed the Export-Import Bank of Korea ’s euro-currency debt sale of 750 million euros and the Industrial Bank of Korae’s dollar-denominated debt issuance worth $1 billion since the inauguration of the current government this month.

“With the bond sale, we strenghthened foreign currency reserves at a timely moment amid rising external uncertainty, while also securing funds to repay foreign currency bonds maturing this year,” the finance ministry said in a statement.

A total of $1.2 billion in South Korea's sovereign bonds are coming due this year: 700 million euros in September and $400 million in November.

The ministry said that during a roadshow in London and an online conference this week, global investors expressed confidence in Asia's No. 4 economy.

The orderly transition of power helped ease political uncertainty about the country following the impeachment of former President Yoon Suk Yeol over his martial law decree.

Following the latest sovereign bond issuance, South Korea has about $1.9 billion remaining under the offshore bond sale quota, out of the $3.5 billion ceiling approved by the National Assembly for 2025.

“Depending on the market conditions, we will issue additional foreign currency bonds in the second half of this year, if necessary,” it said.

Write to Yeonhee Kim at yhkim@hankyung.com
#Foreignexchangebonds #sovereignbonds #SouthKoreaforeignexchangebonds #SouthKoreasovereignbonds #SouthKorea'sMinistryofEconomyandFinance

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