Backing up Overseas Ventures

Export-Import Bank provides extensive support to overseas Korean firms

The Export-Import Bank of Korea is an official credit agency providing comprehensive export credit and guarantee programs to support Korean businesess operating overseas. Since its establishment in 1976, the bank has actively supported Korea's export-led economy and facilitated economic cooperation with foreign countries.
Korea Exim Bank's primary services include export loans, trade finance and guarantee programs structured to meet the needs of clients in a direct effort to both complement and strengthen the clients'competitiveness in global markets. The bank also provides overseas investment credit, natural resources development credit, import credit and information services related to business opportunities abroad.
Furthermore, the bank is responsible for the operation of two government funds: the Economic Development Cooperation Fund (EDCF), which is a Korean official development assistance program, and the Inter-Korean Cooperation Fund (IKCF), an economic cooperation program with North Korea.
The bank strives to become "Your Partner for Global Business"as reflected in its vision by continuously fostering innovation and development throughout its operations.
As of Dec. 31, 2007, the bank's total assets amounted to 23.64 trillion won, its total equity was 4.94 trillion won, paid-in capital was 3.31 trillion won and its BIS was 11 percent.
The bank's overseas investment credit is provided when prospective projects are considered as contributing to the sound development of the national economy and promoting economic cooperation with foreign countries concerned. Borrowers must have three years of experience in the field to be eligible for export loans from the bank.
The bank has three types of loan facilities: Credit to Korean companies for equity participation in foreign companies; credit to Korean companies for re-lending to foreign companies in which the Korean companies have an equity share; and long-term funds for ventures operating outside Korea.
The bank provides loans in either foreign currency or Korean won with the coverage of 80 percent (90 percent for small- and medium-sized companies) of the funds required for investment projects.
The interest rates on loans in Korean won have both fixed and floating rates. The fixed rate is made of the base rate and margin, while the floating rate is made of base rate and margin. The interest rates on foreign currency loans also have both fixed and floating rates. The fixed rate is made of swap plus margin and the floating rate is equal to 6 months LIBOR plus margin.
The repayment term is maximum 25 years -- including a three-year grace period -- of repayment of principal made in equal annual installments. Security includes bank guarantees, pledges or a mortgage on the borrowers'local assets. A loan on credit is possible to creditworthy borrowers.
The bank, however, will not provide loans to ineligible borrowers including individuals who engage in business and investment in foreign stocks and bonds for speculative purposes.
In the meantime, on March 3, the bank announced the issuance of the ringgit bond amounting to $300 million (MRY 1 billion), becoming the first Korean entity to ever tap into the Malaysian bond market. The issued bonds consist of 5-year and 10-year maturity bonds, each in the amounts of $150 million.
After the ringgit-dollar currency swap, the interest rates were Libor plus 98bp for the 5-year maturity bonds and 119 bp for the 10-year maturity bonds, which are 30-40 bp lower than when directly issuing bonds in the U.S. dollar market. nw

Chairman Yang Cheon-sik of Korea Exim Bank.