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BKL Advises Republic of Korea on Issuance of a Foreign Exchange Equalization Bonds in the Aggregate Principal Amount of US$1 Billion


BKL successfully advised the underwrites on the Republic of Korea’s issuance of US$500,000,000 3.500% notes due 2028 and the US$500,000,000 3.875% notes due 2048 (together, the “Foreign Exchange Equalization Bonds”) on September 20, 2018, which were listed on the Singapore Stock Exchange. 

The Foreign Exchange Equalization Bonds attracted great interest from investors, soliciting purchase orders from about 140 foreign institutional investors amounting to a total of 5.7 times (record-high at the time) the planned amount. The Korean government's credit rating was AA (safe) by S&P at the time of issuance, being the third highest among the ten investment grades at the time, and its bonds were rated as highly despite difficult domestic and overseas circumstances such as global economic slowdown, US interest rate hike, trade conflicts between the U.S. and China, and insecurity in emerging countries, reconfirming its strong credit-worthiness in the international market. This successful issuance of the Foreign Exchange Equalization Bonds reflects the international financial market’s positive view of the Korean economy, which is expected to create a favorable environment for the issuance of foreign bonds by other private sector Korean domestic institutions by providing a benchmark interest rate for issuance of foreign currency bonds.

Citigroup Global Markets Inc., Crédit Agricole Corporate and Investment Bank, The Hongkong and Shanghai Banking Corporation Limited, The Korea Development Bank and Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as underwriters for the issuance of the Foreign Exchange Equalization Bonds.

BKL’s Capital Markets team comprising of partners Eui Jong (EJ) Chung, Seung-Il Hong, senior foreign attorney (State of New York) Annie Eunah Lee, attorney Yelim Hyon and foreign attorney (State of New York) Heesug Chung, provided legal advice to the underwriters as to matters relating to Korean law, including; reviewing the registration statement and prospectus filed with the US Securities and Exchange Commission, reviewing the subscription agreement, agency agreement and other related agreements and documents, and issuing legal opinions. In Particular, BKL played an important role by thoroughly reviewing descriptions in the prospectus, including the relevant risk factors section, to assist foreign investors in better understanding the complicated political and diplomatic situation in Korea close to the date of issuance.  
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