State Curbs Cut Korea Foreign-Currency Note Sales, Woori Says
February 08, 2010, 11:56 PM ESTJungmin Hong
Feb. 9 (Bloomberg) -- South Korean borrowers will sell fewer foreign-currency bonds this year because of a government clampdown on state-company sales and lower domestic funding costs, according to Woori Investment & Securities Co.
“Companies will seek funds from domestic markets rather than global (markets) in 2010 although nearly $20.1 billion of foreign-currency notes will mature,” Louis Shin, a credit analyst at Woori Investment said in a report today.
Export-Import Bank of Korea and Korea Development Bank have a combined $4.9 billion in bonds due this year while other state-run companies hold $1.9 billion in maturing bonds, according to Woori.
Other public companies including Korea Water Resources Corp., Korea Land & Housing Corp., Korea Gas Corp. and Korea National Oil Corp. have been preparing to sell foreign-currency bonds to fund public projects, though many are on hold due to the state controls, according to Shin.
“The government is likely to impose regulations on aggressive overseas bond sales by government-owned companies to curb rapid won appreciation,” Shin said.
South Korea’s won rose to 1119.95 won per dollar on Jan. 11, the strongest since September 2008, according to Seoul Money Brokerage Services Ltd. It was at 1166.25 to the dollar as of 12:50 p.m. Seoul time today, Bloomberg data show.
South Korea’s government will review the purpose of foreign-currency bond sales by state-run companies to curb currency volatility, a finance ministry official said in January, declining to be identified. A rising won harms Korean exports.
Among private businesses, Hynix Semiconductor Inc. and Kia Motors Corp. are expected to issue foreign-currency bonds to finance investment, while SK Energy Co., GS Caltex Corp., Shinsegae Co. and GS Engineering & Construction Corp. may also issue notes, said Shin.
--Editors: Tom Kohn, Ed Johnson
To contact the reporter on this story: Jungmin Hong in Seoul at jhong47@bloomberg.net
To contact the editor responsible for this story: William McSheehy at wmcsheehy@bloomberg.net
