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BKL Advises on The Republic of Korea’s Issuance of EUR 700 Million and US$625 Million Foreign Exchange Equalization Bonds


BKL advised on the successful issuance and offering of foreign exchange equalization bonds, US$625,000,000 1.000% Notes due 2030 (the “USD Exchange Equalization Bonds”) and €700,000,000 Zero Coupon Notes due 2025 (the “EUR Exchange Equalization Bonds” and together with the USD Exchange Equalization Bonds, the “Exchange Equalization Bonds”) by The Republic of Korea (the ”Republic”), on September 16, 2020. The USD Exchange Equalization Bonds were listed on the Singapore Exchange Securities Trading Limited and the EUR Exchange Equalization Bonds were listed on the Frankfurt Stock Exchange. 

In the midst of the worldwide Corona COVID-19 pandemic situation, this issuance of the Republic’s Exchange Equalization Bonds was highly successful being priced at record low rates. The USD Exchange Equalization Bonds were priced at a yield of 1.198%, being 50 basis over comparable 10-year US treasury bonds, and the EUR Exchange Equalization Bonds were priced at a minus yield of 0.059%, being 35 basis points over Europe’s mid-swap level. Orders for the  USD Exchange Equalization Bonds and the EUR Exchange Equalization Bonds were oversubscribed 5.8 times and 7.8 times, respectively, attesting to the foreign investors’ confidence in Republic’s credit worthiness even amid the global financial uncertainties due to the worldwide Corona COVID-19 pandemic situation.

BNP Paribas, Merrill Lynch International, BofA Securities, Inc., Citigroup Global Markets Limited, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Standard Chartered Bank and Mirae Asset Daewoo Co., LTD. Acted as the underwriters for the issuance of the Exchange Equalization Bonds.

Acting as Korean counsel to the underwriters, BKL contributed to the success of this transaction by providing timely and appropriate Korean law advice in the current complicated and uncertain political and economic Korean environment, including assisting in appropriate disclosure regarding the same in the offering documents to potential investors. Throughout the whole transaction, BKL advised the underwriters on all matters pertaining to Korean law, including reviewing the prospectus, registration statement, and post-effective amendment filed with the US Securities Exchange Commission, reviewing the terms agreement, agency agreement and other transactional agreements and documents, and issuing legal opinions. BKL’s team comprised of partners Eui Jong (EJ) CHUNG, Hee-Gang SHIN and Seungil HONG, senior foreign attorneys (State of New York) Annie Eunah LEE and Heesug CHUNG, and attorneys Young Jin HA and Jungwon HWANG.

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