이 기사는 2020년 02월 06일 08:00 thebell 에 표출된 기사입니다.

Demand for kangaroo bonds issued by South Korean companies is getting stronger amid positive investor sentiment.

According to thebell’s league tables, kangaroo bonds - debt denominated in Australian dollars and issued by offshore firms in the Australian market - issued in 2019 amounted to 1.29 billion U.S. dollars. Kangaroo bonds took up 4.97 percent of total Korean paper issuance (around $25.98 billion). Dollar-denominated bonds accounted for 71.02 percent while euro- and Swiss franc-denominated bonds took up 11.88 percent and 6.18 percent, respectively.

So far kangaroo bonds have been issued mainly by financial institutions. Over the past five years, the state-run banks, including Korea Development Bank (KDB) and the Export-Import Bank of Korea (Eximbank), and financial institutions, including Industrial Bank of Korea (IBK), Shinhan Bank and Hyundai Capital, have sold kangaroo bonds.

Debts issued by financially sound financial institutions have gained strong demand in a conservative kangaroo bond market. More than half of the issuance was allocated to Asian institutional investors.

Last year, Korea Southern Power Co. (KOSPO) successfully issued a 300 million Australian dollars kangaroo bond. What’s notable was that the domestic non-financial company succeeded in bond offering and nearly 75 percent of the issuance went to onshore investors. It is said an Australian institutional investor asked the utility firm to sell such bonds regularly. Over the past five years, Korea National Oil Corporation had been the only non-financial firm that issued kangaroo bonds.

Thanks to strong onshore demand, expectations on the kangaroo bond market have heightened. As Australian financial regulator imposed tougher capital requirements on Australian banks in July last year, the banks’ issuance of senior debts is expected to decrease. If Australian banks, which have led the country’s bond market, shift their focus from senior debts to subordinated bonds, onshore investors will have to flock to senior debts denominated in Australian dollars and issued by offshore firms.

Debts sold by South Korea’s state-run companies are especially likely to draw strong attention. This is because Australian market is so conservative that it only targets bonds with credit ratings of AA or above and supply of bonds issued by non-financial firms is short.

What makes kangaroo bonds more attractive is that they can target both Australian and Asian investors. As kangaroo bonds have a broad investor base in the Asia region, issuers who already have sold foreign currency denominated bonds will be able to raise funds easily.

Volatility is also relatively limited. Unlike other cross-currency deals, kangaroo bonds maintain a reasonable level of interest rates, which enable them to be sold almost anytime.

The key is the timing of issuance. As kangaroo bonds’ movement is similar to that of U.S. dollar-denominated bonds, issuers have to catch a more favorable moment for bond issuance. In August of 2019, when KDB issued a 700 million Australian dollar worth bond, the bank succeeded in reducing borrowing costs by around 10 basis points compared to its latest U.S. dollar-denominated bond sale, aided by abundant liquidity and short supply of senior bonds in the Australian debt market.

Issuers who are to raise a small amount of money can take advantage of kangaroo bonds. Issuers are able to raise 200 million dollar to 300 million dollar in kangaroo bond market, whereas it is difficult to raise that amount of money via U.S. dollar-denominated bond issuance.

(By reporter Pi Hye-rim)