Korean corporate bonds gain global investor interest

South Korea's corporate global bonds have become an investment attraction in overseas markets, helped by the country's sturdy credit ratings, finance industry officials said Thursday.

Korea Gas Corp. earlier this week sold $900 million in five- and 10-year dollar-denominated bonds. Presale estimated demand was for $4 billion from 240 institutions. The yield for five-year notes settled at 1.920 percent and 10-year notes at 2.325 percent. The yield for the latter was the lowest for a South Korean company for that maturity date. It marks more than a 1 percentage point drop from July last year when the energy developer sold 10-year bonds for 3.52 percent.

South Korea's second-largest mobile carrier KT Corp. issued $400 million in 10-year bonds in the United States on Tuesday. With the demand estimate of $3.5 billion, the yield was set at 2.588 percent, 1.1 percentage points more than U.S. government bonds.

The Export-Import Bank of Korea issued $2.5 billion in bonds in May, with a demand of $5.2 billion worth. Three-year notes have a 1.796 percent return, and 10-year notes 2.649 percent. The lender's 10-year maturity sold in November last year at a 3.28 percent yield.

Demand for Kia Motors' $700 million in bonds sold in April was $10 billion.

Officials said South Korea's credit rating improvements have helped the popularity of the country's corporate bonds. Standard & Poor in September raised South Korea's sovereign rating to AA- from A+. In December, Moody's adjusted up its rating for South Korea to a record high of Aa2.

"After South Korea's credit ratings were raised last year, global players who bet only on AA and above-rated countries have increased Korean investments in their portfolios," an official at the Korea Center for International Finance said.

"Key countries are expected to ease their monetary policy after Brexit," he said. "With ample liquidity in the world financial market, the yields on global bonds are likely to go lower. (Yonhap)