A view of the Korea SMEs and Startups Agency headquarters. [Korea SMEs and Startups Agency]
A view of the Korea SMEs and Startups Agency headquarters. [Korea SMEs and Startups Agency]

The Korea SMEs and Startups Agency announced Wednesday that it had successfully issued foreign-currency bonds in overseas capital markets for the first time in 10 years.

The agency issued a $400 million global social bond with a 3.5-year maturity. The coupon was set at 40 basis points above the US Treasury rate — the tightest spread ever recorded for a three-year fixed-rate foreign-currency bond issued by a domestic public corporation or agency. The agency said it secured funding at a lower interest rate than it would have achieved by issuing bonds domestically.

To overcome the decade-long absence from the foreign bond market, the agency held investor relations sessions targeting global institutional investors. From July 12 to 17, it conducted a non-deal roadshow in major financial hubs including Hong Kong, Singapore and Taiwan, presenting its creditworthiness and policy finance track record to global institutional investors. Then, on Aug. 12 and 13, it held a deal roadshow ahead of the bond issuance to gauge investment appetite. Through these efforts, it secured demand from institutional investors not only across Asia but also in Europe and the Middle East.

The bond also drew high marks on ESG grounds. The agency received an SQS1 ("Excellent") rating — the top grade in the social financing category — from Moody's ESG assessment. It is the highest rating Moody's has assigned to any Korean social financing deal in the Asia-Pacific region over the past five years, and the first time a domestic institution has achieved that level.

The SQS is a five-tier rating system that evaluates the credibility of an ESG bond's issuance framework, its compliance with international ESG bond standards, and the appropriateness of how proceeds will be used. The agency also expects to reduce bond issuance costs further through Hong Kong's Green and Sustainable Finance Grant Scheme.

The funds raised will be channeled into policy financing for small and medium-sized enterprises and venture companies. They are earmarked for supporting AI transformation among SMEs, fostering new industries, securing drivers of innovative growth and creating jobs.

The bond issuance is also significant in that it broadens the funding base for SME policy finance beyond domestic capital markets to overseas sources. By securing access to competitive interest rates in international bond markets, the agency has expanded its ability to flexibly choose funding instruments depending on market conditions and to maintain a stable supply of policy finance resources.

"This is the fruit of global investors' high regard for the agency's fundamentals and the growth potential of Korea's small and venture businesses," said Kang Seok-jin, chairman of the Korea SMEs and Startups Agency. "We will continue to diversify our funding sources to secure high-quality capital at the right time, and serve as a reliable pillar for small and venture businesses navigating crises and pursuing innovative growth."


boo@heraldcorp.com