The state-owned lender, known as Kexim, issued 40 billion won ($37.8 million) of notes on Dec. 28 tied to rates for certificates of deposit, Lee Hae Sung, senior manager at the Seoul-based bank’s treasury department, said by phone. The 15- year callable securities pay 4 percent annually for days when the 91-day CD rate stays below 6 percent, according to data compiled by Nice Pricing Inc., a bond-price assessment company in Seoul.
The CD measure, which South Korean banks use as a benchmark for short-term lending, dropped to the lowest level in almost two years in October after the country’s central bank cut interest rates for the second time last year, according to data compiled by Bloomberg. The reference yield was at 2.87 percent on Jan. 10, according to Bloomberg data.
Shinyoung Securities Co., a Seoul-based brokerage house, bought the notes, Lee said.
“For investors, just a little bit of enhancement in yields can be an attractive investment target these days,” Lee said.
Kexim may issue as much as 400 billion won of structured notes in 2013, though the bank won’t consider more complex products than single-range accruals, Lee said.