LG Card, one of Korea's largest credit card companies in terms of assets with KRW31.8 trillion (USD26 billion) in assets, recently entered a cross-currency interest-rate swap on the back of a three-year USD200 million U.S. dollar floating bond offering issued last week. "Our business nature is local--we don't want foreign exchange exposure," said Jae Gwang Soh, manager in the finance department in Seoul, explaining why the company converted the entire issue into won.
In the transaction, the insurer pays a fixed rate of 5.8% and receives a floating dollar rate of LIBOR plus 80 basis points. "This is part of our effort to diversify our funding sources," added Soh. Local houses Hana Bank and the Korea Development Bank acted as counterparties for the swap. "Hana Bank and KDB were interested in this transaction and the pricing was reasonable," said Soh. Officials at both banks confirmed the trade.
