One of South Korea’s policy banks, Export-Import Bank of Korea (Kexim), on May 17 priced a dual-tranche euro bond offering totalling €1.5 billion (US$1.58 billion) in the largest-ever senior unsecured public euro bond issuance out of Korea.

The Reg S/144A deal included a two-year green floating rate note (FRN) amounting to €550 million, which was priced at 101.731% with a re-offer spread of 15bp over the three-month Euribor. This was 5bp tighter than the initial price thought of 20bp area. The other tranche was a 3.5-year fixed rate note amounting to €950 million, which was priced at 99.795% to offer a yield of 1.436%. This represented a spread of 20bp over mid-swap, or 5bp inside of the initial price thought of 25bp area.

The deal’s arrangers announced the mandate on May 12 for 3.5-year and seven-year fixed rate notes and a two-year green FRN based on reverse inquiry with a series of global investor calls in Europe on May 16 and Asia on May 17. With a broad-based investor interest across the three tranches in the ensuing three days, the books were opened with the terms announcement at 9am London time with the initial price thoughts of 20bp area for the two-year FRN, 25bp area for the 3.5-year fixed rate note and 45bp area for the seven-year fixed rate note.

The unforeseen demand for the two-year FRN, coupled with the solid traction in the 3.5-year fixed rate note, led to the decision to drop the seven-year tranche in line with Kexim’s fundamental goal to minimize duration.

The final order book amounted to €655 million on the two-year FRN and €1.1 billion for the 3.5-year fixed rate note. There were 14 orders in the green FRN from ESG investors with a green share of 82% on the final allocation.

The net proceeds from the fixed rate note will be used for general operations, including repayment of foreign currency obligations and the making of foreign loans. For the green FRN, the net proceeds are earmarked to finance or refinance projects or assets related to renewable energy, clean transportation, energy efficiency, sustainable water and waste management, and pollution prevention and control.

Citi, Crédit Agricole CIB, HSBC, J.P. Morgan, Kookmin Bank, Korea Investment & Securities and Natixis were the joint bookrunners and lead managers for the transaction, while Kexim UK acted as a co-manager.