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| Export-Import Bank of Korea (Eximbank) Chairman Eun Sung-soo speaks to reporters at a press conference in Seoul, Thursday. Courtesy of Eximbank |
By Park Hyong-ki
The state-run Export-Import Bank of Korea (Eximbank) will issue a similar amount of bonds as last year to help local companies finance their acquisitions of assets and technologies abroad, Chairman Eun Sung-soo said.
The policy bank issued bonds worth $10 billion in 2018, he said.
"We will issue bonds denominated in 26 currencies to provide not only export project but also acquisition financing as the bank did in 2018," the chairman said at a press conference in Seoul, Thursday.
"We are a bank whose core business is lending. Since we don't have a depository business, we need to raise capital through bonds to extend loans."
For example, it issued yen-denominated bonds and extended loans in yen to SK hynix for the acquisition of Toshiba's memory business last year, Eun said.
A consortium consisting of SK, Bain Capital, Apple and Dell sealed this $18 billion deal in June 2018.
The increased support for cross-border deals is part of the state-run bank's plan to provide 49 trillion won in loans to local companies for overseas projects such as shipbuilding and energy plant construction in 2019, up from 48.8 trillion won in 2018.
Eximbank also is seeking to guarantee loans worth 13 trillion won taken out from the bank and other financial institutions by local companies for such projects, up from 9 trillion won.
With the money raised from bonds, Eximbank will consider investing in equities of companies or projects in a "small and limited amount," if such a move can strategically help them move forward in winning and developing those projects, as well as entering new markets, the bank said.
Eximbank can invest in convertible bonds issued by such companies.
However, Eun reiterated that it is a bank, not an investor and not "Santa Claus," saying it will definitely back companies on reasonable grounds.
For instance, the policy bank will not back a financial scheme called "refund guarantees" for shipbuilders that secured orders at ultra-low prices for the sake of boosting the number of their projects to more than they could handle.
He referred to a past case involving Sungdong Shipbuilding & Marine Engineering, which is under court receivership.
When such shipbuilders fail to complete their projects due to financial difficulties, the scheme forces Eximbank and commercial banks to pay the price to purchasers such as energy and shipping companies.
Eximbank will further work with local companies to attract investment from the National Pension Service and Korea Investment Corp. for their overseas deals.
"We have strengthened the bank's fundamentals. We are fully ready to back our local companies by extending our collaborative reach to the pension and sovereign wealth funds," Eun said.
"No longer will the companies say they couldn't win deals because they couldn't get enough support from the policy bank."
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