Korea Land and Housing Corporation (LH) issued foreign currency bonds four times during the first half of the year across multiple currencies including Swiss franc, Brazilian real, Australian dollar, and yen, totaling $937.16 million equivalent (approximately 1.39 trillion won). This overseas diversification strategy emerged as domestic bond market conditions deteriorated, with LH's 3-year yield rising from 3.141% at the start of the year to 4.256%, while the 3-year treasury benchmark climbed from 2.926% on January 2 to 3.890%. LH expanded beyond its established dollar bond program to tap niche offshore markets, securing stable funding and competitive rates amid frozen domestic investor sentiment driven by interest rate hike concerns.
LH Issues $937 Million in Foreign Currency Bonds Across Four Currencies in H1
According to Yonhap Infomax 'Issuance/Maturity List' (screen number 4022) on the 15th, LH issued foreign currency bonds a total of four times during the first half of the year. In April, LH issued Swiss franc bonds and Brazilian real bonds in the same month, followed by Australian dollar bonds in May and yen bonds in June, totaling $937.16 million (approximately 1.39 trillion won) on a dollar-converted basis.
![LH's foreign currency bond issuances in H1]()
LH's foreign currency bond issuance details for H1. Source: Yonhap Infomax 'Issuance/Maturity List' (screen number 4022)
LH's overseas fundraising efforts stand out considering the difficult conditions public enterprises faced in the domestic bond market during the first half of the year. As domestic investor sentiment froze due to concerns over base rate hikes, public enterprises experienced failed auctions or had to accept sharply elevated market rates even with 'AAA' top credit ratings. The 3-year treasury yield民평 rose from 2.926% at the start of the year (January 2) to 3.890% on the previous day, causing public enterprise issuance rates to surge significantly. LH's 3-year民平 rate similarly climbed from 3.141% at the start of the year to 4.256% on the previous day, reflecting worsened funding conditions.
LH found its breakthrough in overseas markets. Unlike the domestic won market, overseas markets offered stable funding through abundant liquidity combined with Korean Paper's safe-asset positioning. LH moved beyond dollar bond issuances to pioneer various alternative currency markets, targeting niche opportunities. Having secured ample funding in overseas markets, LH maintained relative liquidity flexibility despite domestic market volatility and achieved cost savings by raising funds at rates lower than elevated domestic民平 rates.
LH Debuts in Kangaroo Bond Market with 500 Million AUD Issuance
LH's foreign currency market strategy did not materialize overnight. The corporation explored various currency markets since last year, deliberating investor base expansion. The kangaroo bond (Australian dollar bond) debut completed in May exemplifies this approach. At a time when multiple public enterprises reduced domestic bond issuances due to weakened investor sentiment, LH's 500 million AUD (approximately 536.4 billion won) fundraising attracted particular attention.
This resulted from LH's persistent efforts. After monitoring the Australian dollar market and gauging opportunities, LH established market contact through a 260 million AUD private placement in September. The corporation then announced its full-scale funding activities in the kangaroo bond market with this year's public debut.
LH Enters Euro, Swiss Franc, Yen, and Brazilian Real Markets
LH's euro bond debut in November last year surprised the Korean Paper market. While euro bond markets are considered difficult for new entrants due to investors' conservative characteristics, LH demonstrated rate competitiveness from its first post-integration issuance and settled in quickly. LH's territorial expansion continued this year. In April, LH became the first Korean issuer to tap the Swiss franc bond market this year, completing the fundraising. In May, the corporation expanded further by issuing private placement yen bonds, capturing offshore Asian investment demand. LH continues issuing Brazilian real bonds, which offer advantages stemming from the tax treaty between Korea and Brazil.
An LH funding official stated, "Given the substantial funding needs for policy project implementation, we will enhance funding stability and flexibility by utilizing domestic and overseas markets in a complementary manner."
FAQ
What foreign currency bonds did LH issue in the first half of the year?
LH issued foreign currency bonds four times during the first half of the year: Swiss franc bonds in April, Brazilian real bonds in April, Australian dollar bonds in May, and yen bonds in June, totaling $937.16 million equivalent (approximately 1.39 trillion won).
Why did LH increase overseas bond issuances?
LH expanded overseas issuances as domestic bond market conditions deteriorated, with the corporation's 3-year yield rising from 3.141% at the start of the year to 4.256% and domestic investor sentiment freezing due to interest rate hike concerns. Overseas markets offered abundant liquidity and competitive rates compared to elevated domestic민평 rates.
When did LH debut in the kangaroo bond market?
LH completed its kangaroo bond (Australian dollar bond) debut in May with a 500 million AUD issuance (approximately 536.4 billion won), following a 260 million AUD private placement in September that established initial market contact.
