Korea

194 EuroWeek Financing supranationals and agencies

Korea Eximbank(Kexim)Rating A1, A, A+

Yong-hwan KimChairman & president

Dong-soo ParkDeputy president

Jin-kyung KimExecutive director

KeY officials

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

Source: Kexim

$ bn

0 5

10 15 20 25 30 35 40 45

31 D

ec 05

31 D

ec 06

31 D

ec 07

31 D

ec 08

31 D

ec 09

31 D

ec 10

ToTal asseTs

Source: Kexim

$ bn

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

31 D

ec 05

31 D

ec 06

31 D

ec 07

31 D

ec 08

31 D

ec 09

31 D

ec 10

ToTal caPiTal

Source: Kexim

$ bn

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0

10.0

2005

2006

2007

2008

2009

2010

Feb 1

1

funDing requiremenT

Source: Kexim

Korean government

74.4%

Bank of Korea 22.1%

Korea Finance Corporation

3%

ownershiP sTrucTure

Data at February 1, 2011. Source: Kexim

$ bn

0 0.5

1 1.5

2 2.5

3 3.5

4 4.5

5

2011

2012

2013

201420

1520

1620

1720

1820

1920

2020

2120

22

issuance maTuriTY Profile

*To February 1. Source: Kexim

$ bn

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00

2005

2006

2007

2008

2009

2010

2011

*

gross BonD issuance

rank lead manager amount $m no of issues

% share

1 JPMorgan 996 5 18.88

2 Deutsche Bank 537 3 10.19

3 RBS 529 6 10.04

4 HSBC 517 8 9.81

5Daiwa Capital Markets

484 1 9.19

6Bank of America Merrill Lynch

469 3 8.88

7 Morgan Stanley 296 4 5.62

8Standard Chartered Bank

290 4 5.51

9 RHB Capital Bhd 261 2 4.95

10 Citi 248 1 4.7

10 BNP Paribas 248 1 4.7

subtotal 4,877 31 92.47

Total 5,275 33 100

Source: Dealogic (March 16, 2010 to March 15, 2011)

ToP BooKrunners

Korea

Financing supranationals and agencies EuroWeek 195 %100

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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)

PrivaTe PlacemenT PolicY

mid and long term US shelf, yen shelf, euro MTN, Malaysian MTN, Australian MTN

short termUS CP, euro CP

issuance meThoDs

Pricing date March 3, 2011

value Sfr250m

maturity date March 30, 2015

coupon 2.375%

spread to swaps 100bp

Bookrunners RBS, UBS

Pricing date October 13, 2010

value $1bn

maturity date January 29, 2021

coupon 4%

spread to benchmark 160bp over USTs

Bookrunners Bank of America Merrill Lynch, Barclays Capital, HSBC, JPMorgan, Morgan Stanley

Pricing date September 3, 2010

value $500m

maturity date March 13, 2012

coupon 3m Libor +105bp

Bookrunners JPMorgan

Source: Dealogic

recenT Deals

standard & Poor’s

A, stable outlook

strengths•Criticalpublicpolicyroleascountry’slegally

mandated export credit agency•Integrallinkwiththegovernment

weaknesses•Lowprofitability•Highconcentrationrisk

Kexim’s stable outlook reflects that on the long-term rating on 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 economic management. So far, the government has shown no intention of privatising the bank. Nevertheless, in the unlikely scenario that Kexim’s public policy role, or link, to the government diminishes if the government embraces a broader laissez-faire stance, the ratings on Kexim may come under downward pressure, depending on the magnitude of such a change.

KeY recenT raTing agencY commenTarY

fitch

A+, outlook stable

The ratings of Export‐Import Bank of Korea (Kexim) are aligned with the Republic of Korea’s sovereign rating, reflecting its quasi-sovereign status. The Korean government is legally obliged to cover Kexim’s losses if its capital reserve cannot cover them, thereby effectively guaranteeing its solvency. Fitch notes that there is still a risk of higher albeit not excessive credit costs, given slow global economic growth and the bank’s significant bias towards corporates, particularly in the shipbuilding sector (47% of total; 5% for SME shipbuilders). Fitch notes that Kexim’s liquidity is highly vulnerable to capital market conditions (particularly for foreign currency), due to its full reliance on wholesale funding. However, the bank’s weak funding structure is mitigated by the government’s strong support. Also, despite substantial expansion in loans and guarantees in recent years, Kexim’s capitalisation was adequate at mid-2010, with a Tier 1 of 9.3% and a total capital adequacy ratio of 10.9%, thanks to the government’s capital injections.

KeY recenT raTing agencY commenTarY