Hyundai Card revives dormant 'Kimchi bond' market with $20m issuance

(Hyundai Card)

Hyundai Card said Monday that it has issued 29 billion won ($20 million) in domestic foreign currency-denominated bonds, known as Kimchi bonds, marking the first meaningful reopening of a market that had been effectively frozen for over a decade.

Kimchi bonds are issued in South Korea but denominated in foreign currencies such as the US dollar or the euro. Hyundai Card’s issuance took the form of a one-year public offering, with the interest rate set at the secured overnight financing rate plus 60 basis points.

The deal is drawing attention as it effectively ends a 15-year hiatus in the Kimchi bond market. Since 2011, the issuance aimed at converting proceeds into Korean won had been largely restricted due to strict foreign exchange regulations. The Bank of Korea recently eased those rules to address supply-demand imbalances in the foreign exchange market and alleviate depreciation pressure on the won.

For Hyundai Card, the issuance represents a strategic expansion of its financing portfolio. The company has been diversifying its funding sources beyond traditional domestic bonds, utilizing overseas dollar-denominated bonds, syndicated loans and asset-backed securities to enhance funding stability.

“Diversifying funding sources has become essential for specialized credit finance companies amid growing market volatility,” a Hyundai Card official said. “We moved ahead with this Kimchi bond issuance to secure stable liquidity and strengthen our funding flexibility.”