KAREN JOY BACUDO
Finance Editor
Hyundai Card has issued a dual-currency Kimchi bond in US dollars and Chinese yuan, in what it described as the first such issuance by a Korean credit-specialised financial company.
The public deal totalled about KRW 128.7 billion, combining a USD $20 million tranche with a CNY 440 million tranche. Issued under Korean green bond rules, the bond will finance financial services related to Hyundai Motor Group’s electric-vehicle and fuel-cell electric-vehicle businesses.
The transaction adds to a funding push by Korean non-bank lenders as market volatility raises borrowing costs and pressures traditional bond issuance. Credit card companies in South Korea rely heavily on capital markets for funding because, unlike banks, they do not take deposits.
Kimchi bonds are foreign currency-denominated bonds sold in Korea. They allow local borrowers to raise overseas currencies in the domestic market rather than going directly to offshore bond investors.
The latest issue follows Hyundai Card’s return to the public Kimchi bond market earlier this year, after a 15-year gap in such issuance, to convert proceeds into won. Other Korean groups, including LG Electronics and Lotte Property & Development, have also entered the market, suggesting broader use of the format.
The dollar tranche was structured as a one-year note priced at 77 basis points over SOFR. The yuan tranche was issued as a two-year bond with a 2.09% coupon.
Using two currencies aims to broaden the investor base while reducing reliance on a single foreign currency. Hyundai Card said the yuan tranche could help it reach Chinese investors showing growing interest in Korea’s domestic bond market, while broadening demand beyond its existing dollar funding base.
Recent regulatory easing by South Korean foreign exchange authorities has also helped revive interest in Kimchi bonds. The measures were intended to ease supply-and-demand imbalances in the foreign exchange market and reduce depreciation pressure on the won, thereby making the instrument more visible as a source of foreign-currency liquidity.
Issuance has been rising among credit-specialised finance companies and large corporates. Hyundai Card has been among the more active issuers, having also sold a USD $80 million Kimchi bond in February.
Green funding
The latest bond also fits into the company’s broader use of green-labelled debt. Hyundai Card said the issue qualifies under the Korean Green Taxonomy Guidelines, with proceeds earmarked for financial services linked to lower-emission mobility activities within Hyundai Motor Group.
The company has used ESG and green bonds in recent years as part of its funding mix. It cited a KRW 240 billion green bond in 2019, which it described as the first by a Korean credit card company, and a further KRW 160 billion green bond issued this month.
The broader backdrop remains one of uneven funding conditions for South Korean finance companies. With interest rates and market sentiment shifting quickly, issuers have been seeking alternative structures and currencies to preserve access to capital and avoid dependence on any one market segment.
That has made instruments such as syndicated loans, asset-backed securities and offshore public bonds more important in treasury planning. Hyundai Card has said it has been expanding across those channels as it adjusts its funding profile.
“Amid heightened volatility in both domestic and global financial markets, the funding environment remains challenging,” a Hyundai Card official said. “This dual-currency Kimchi bond issuance is expected to help us expand our investor base and diversify currency-related funding risks. The company will continue to make proactive use of various funding methods to secure stable liquidity and strengthen our funding competitiveness.”
