Korea

158 EuroWeek Financing supranationals and agencies

Korea Eximbank (Kexim) is an official export credit agency. Established in 1976, Korea Eximbank’s primary services include export loans, trade finance and guarantee programmes, and the bank also provides overseas investment credit, natural resources development credit, import credit and information services.

Korea Eximbank is also responsible for the operation of two government funds: the Economic Development Co-operation Fund (EDCF) and the Inter-Korean Co-operation Fund (IKCF).

Overview

RATING A1, A, A+

Outstanding loans by corporate size

Source: Kexim (April 2, 2010)

TotalW34.96bn

Public & others

SMEs

Large corporations

40%12%

40%

Source: Kexim (April 2, 2010)

Total paid-in capital

W5.2bnKorea Finance Corporation

Bank of Korea

Korean government

74.4%

22.6%

3%

$ bn

Debt issuance (2005-10)

* ForecastSource: Kexim

2005

2010

*20

0620

0720

0820

090

1

2

3

4

5

PrivatePublic

* GBP, THB, AUDSource: Kexim (April 2, 2010)

Total$19.4bn

Other*

MYR

MXN

SGD

HKD

BRL

CHF

EUR

JPY

USD

59%

3.9%

13.6%

5.8%

5.1%

5.2%

2.1%1.6%

2.9%

0.8%

$ bn

Debt maturity profile (2009)

Source: Kexim

< 1 ye

ar

1 –

5 ye

ars

5 ye

ars

> 5 ye

ars0.0

0.5

1.0

1.5

2.0

2.5

3.0

Outstanding lOans by cOrpOrate size

sharehOlder breakdOwn

debt issuance (2005-10)

Outstanding issuance by currency

debt maturity prOfile (2009)

Korea Eximbank (Kexim)

dong-soo kim

Chairman & president

Jin-kyung kim

Executive director (member of board of directors)

yoon-yung kim

Executive director, treasury & international relations group

hyung-jong noh

Director general, international finance department

minimum size: usually $20m

structure: mostly plain vanilla (exceptions include extendible notes, FX-linked notes)

currency: No preference or limitation (most non-USD issues are swapped into USD)

key Officials

private placement pOlicy

Public offerings $4bnPrivate placements $4.1bntotal target $8.1bn

funding prOgramme 2010

158-159 Kexim.indd 158 06/05/2010 13:06

Korea

For further information contact Jeremy Masters on: +44 (0)20 7779 8036 or email: jmasters@euroweek.com

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$ bn

Outstanding loans

Source: Kexim

2005

2006

2007

2008

2009

0

5

10

15

20

25

30

35

40 $ bn

Balance sheet size

Source: Kexim

2005

2006

2007

2008

2009

0

10

20

30

40

50

Outstanding lOans

balance sheet size

pricing date: March 2, 2010value: $1bnmaturity date: September 9, 2015 Offer price: 99.465coupon: 4.125%spread to benchmark: 195bp over USTsbookrunners: Deutsche Bank, HSBC, JPMorgan, RBS, UBS

pricing date: September 30, 2009value: Sfr 500mmaturity date: October 26, 2012 coupon: 2.5% bookrunners: UBS, RBS

pricing date: July 7, 2009value: $1.5bnmaturity date: January 14, 2015Offer price: 99.426coupon: 5.875%spread to benchmark: 362.5bp over USTsbookrunners: Bank of America Merrill Lynch, Barclays Capital, Credit Suisse, Deutsche Bank, Morgan StanleySource: Dealogic

mOst recent syndicated deals

fitch ratingsA+, revised outlook from negative to stable (September 2, 2009)

The ratings of Kexim are aligned with the Republic of Korea’s sovereign rating (A+/stable), whose outlook was revised to stable from negative on September 2, 2009, reflecting the bank’s quasi-sovereign status. Kexim is unique among the three major policy banks in Korea – also including Korea Development Bank and Industrial Bank of Korea – given its pure policy role. Its activities support government economic objectives and do not compete with commercial banks. Kexim is wholly state-owned and, under the Kexim Act, the government is legally required to provide funds to cover any losses that the bank may incur but which cannot be covered by its own reserves. Thus, Kexim enjoys a de facto solvency guarantee from the Korean government, which Fitch believes will also ensure that the bank will meet its obligations in a timely manner. While Fitch believes that the government’s effective guarantee for Kexim will remain unchanged, given its mandated policy role, any clear signs of weakening government support for the bank could result in a downgrade in its ratings.

key recent rating agency cOmmentary

pos. bookrunner parents

deal value $ (proceeds) (m)

no. %share

1 Deutsche Bank 603 5 14.0

2 RBS 506 5 11.8

3 Morgan Stanley 498 2 11.6

4 UBS 463 3 10.8

5 Barclays Capital 397 5 9.2

6 HSBC 384 8 8.9

7 BofA Merrill Lynch 354 2 8.2

8 Credit Suisse 298 1 6.9

9 RHB Capital Bhd 259 3 6.0

10 Standard Chartered 199 5 4.6

subtotal 3,962 31 92.1

total 4,302 36 100.0

Source: Dealogic

tOp bOOkrunners april 2009 – march 2010

car ratio: 11.25%Source: Kexim (as at December 31, 2009)

capital adequacy

standard & poor’sA, stable outlook

strengths• Critical public policy role as country’s legally mandated export credit agency• Integral link with the government

weaknesses• Low profitability• High concentration risk

Kexim’s stable outlook reflects that of the Korean government. S&P expects the bank’s public policy role to stay intact over the medium term, as the government remains engaged in active economic management. So far, the government has shown no intention of privatising the bank. Nevertheless, Kexim’s public policy role could diminish if the government were to embrace a broader laissez-faire stance toward economic development, although this is currently unlikely.

key recent rating agency cOmmentary

158-159 Kexim.indd 159 06/05/2010 13:06