Korea Ocean Business Corp (KOBC) has tapped international bond investors to raise $600m to help finance South Korea’s ambitious fleet expansion plans.
The three and five-year bonds, which are due to start trading on the Singapore Exchange from Friday, carry coupons of 5.375% and 5.25%, respectively.
KOBC issued its first foreign currency-denominated bonds on the SGX last year when it raised about $380m from two five-year bonds — one for $80m carried a floating rate while the second, worth $300m, had a coupon of 4.5%.
All four bonds have been issued under KOBC’s $5bn medium-term note programme, which was launched in Singapore in April last year.
JP Morgan was the arranger for the MTNB while the dealers were BNP Paribas, Citigroup, Credit Agricole, HSBC, ING Bank, Standard Chartered Bank and JP Morgan.
Last month, South Korea’s government said it was aiming to spend KRW 5.5 trn ($4bn) to double the capacity of the national carriers to 2m teu by 2030.
President Yoon Suk Yeol said the government would provide ship financing to national carriers to build up their eco-friendly fleets.
Established in 2018, KOBC is a statutory entity that combines three predecessor entities of Korea Maritime Guarantee Insurance, Korea Shipping & Maritime Transportation and Korea Maritime Exchange Information Center.
KOBC is the flagship government-owned policy finance institution for domestic shipping companies that serves to implement the government’s strategy to enhance the competitiveness of the maritime transport industry of South Korea.
KOBC is mandated to provide a stable source of funding to South Korean shipping companies and make various forms of investment to promote the overall growth and stability of the industry.
The company receives substantial financial support from the government in the form of capital contributions and subsidies to undertake its operations.
Korea Development Bank, the Export-Import Bank of Korea and Korea Asset Management Corp own 92.4% of the company with the remaining 7.6% held by other private domestic shipping companies.
According to the bond prospectus, the largest investment made by the company to date is a total of KRW 5.17 trn of loans, guarantees and subsidies extended to HMM of which KRW 1.33 trn were inherited from Korea Shipping & Maritime Transportation, one of the company’s predecessor entities.
Since its establishment, KOBC has provided KRW 3.84 trn worth of support to HMM via purchases of bonds with warrants and convertible bonds, guarantees on debt, subsidies for the purchase of and conversion to eco-friendly vessels, investments in terminal projects, subsidies to membership funds to join THE Alliance, container box lease financing and others.
Since its inception, KOBC has provided financial support worth about KRW 10.1 trn to a total of 131 domestic shipping companies of varying sizes.
KOBC invested KRW 655bn and KRW 780bn in 2022 and 2023, respectively, to support domestic shipping companies in their acquisition of new or secondhand vessels.
