Hana Bank announced on the 28th that it has issued a 5-year Formosa bond worth USD 300 million (approximately KRW 441.2 billion). A Formosa bond is a bond issued in a foreign currency such as US dollars by overseas issuers like Hana Bank in the Taiwanese capital market. In effect, Hana Bank has issued a form of promissory note to raise foreign currency from investors in the Taiwanese financial market. The bank expects that the issuance of this Formosa bond will enable it to establish a stable base for foreign currency funding.

According to Hana Bank, the bond has a maturity of 5 years. The bond’s interest rate was set at the level of the US risk-free benchmark rate (SOFR) plus a spread of 68bp (1bp is 0.01 percentage point). A Hana Bank official said, “It is a spread below 70bp, which has been perceived as a psychological resistance level in the Taiwanese market,” adding that it is “the lowest ever.”

This is Hana Bank’s first Formosa bond issuance in about seven years since it issued a USD 400 million (approximately KRW 586.4 billion) Formosa bond in June 2019. A Hana Bank official said, “Formosa bonds allow the bank to secure stable demand from a small number of core investors, enabling funding at a competitive interest rate,” and added, “Through this Formosa bond issuance, we have further diversified our global foreign currency funding instruments.”

Hana Bank has been focusing on strengthening communication and expanding new investment destinations by holding investor roadshows with major Formosa bond investors in Hong Kong, Taiwan and other markets. As a result of these efforts, the bank said that it attracted valid demand totaling USD 980 million (approximately KRW 1.4366 trillion), more than three times the actual Formosa bond issuance amount, despite heightened volatility in the global financial market due to geopolitical risks in the Middle East and other factors.

An official from Hana Bank’s Funding Department said, “The fact that we were able to raise foreign currency in the Formosa bond market at the lowest spread on record, even amid rising volatility in the global financial market, was due to the strong trust global investors have in Hana Bank,” and added, “We will continue to diversify our foreign currency funding instruments through active communication with investors and sophisticated issuance strategies.”

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