Barclays Capital: South Korea

  • 07 Mar 2002
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Barclays has a wealth of experience in the region, having been active in the Korean markets for over 24 years and with an office in the country since 1977. With over 30 employed locally, Barclays Capital, the investment-banking arm of the Barclays Group, is one of the leading global investment banks active in Korea.

Barclays Capital believes Korea to be a major growth centre in Asia in the medium term. It was the first bank to recommend that the sovereign rating be raised to BBB+, with the country set to outperform the rest of Asia Pacific (ex. China) due to its flexible economic policies and the structural reform implemented since the 1997 Asian crisis. Barclays is backing this belief with resources, a move which will be helped by the recent receipt of a full banking license.

In Asia, Barclays Capital employs over 700 staff with the regional headquarters in Hong Kong and Tokyo and operations in Australia, China, India, Korea, Malaysia, and Singapore. Globally, Barclays Capital maintains a unique debt focus. Through an integrated offering of debt financing and risk management, Barclays Capital serves and supports clients' fund raising activities in the global bond and loan markets, in trade and project finance, in commercial paper, in securitization and in private equity. As part of the Barclays Group, the investment bank has access to the balance sheet of a bank with assets of GBP357 billion, capital resources of more than GBP24 billion (as at 31 December 2001) and an AA credit rating.

The bank's track record in Asia has gone from strength to strength and its achievements have been recognised by a number of industry awards. It was this expertise that led a number of major Korean companies to choose Barclays Capital as their adviser for their debt capital markets activity leading to some significant deals during 2001.

Deals in 2001 include:

Korea Development Bank

Barclays Capital capabilities were fully utilised by the quasi-sovereign bank as Barclays Capital acted as bookrunner on both its syndicated loan of USD 200 million in September and for its USD 500 million five-year global bond issue in November.

The Export - Import Bank of Korea (KEXIM)

In November, Barclays Capital was appointed as a lead arranger for KEXIM's three-year syndicated term loan facility worth USD 210 million. Carrying a coupon of 35 basis points over the London interbank offered rate, the loan was KEXIM's first public loan transaction since 1997.

Korea Electric Power Corporation (KEPCO)

To help diversify its currency risk, KEPCO turned to Barclays Capital to act as one of bookrunners and lead managers for a JPY25 billion three-year Euroyen bond offering. Rated BBB by Standard & Poor's, the fixed coupon of 1.18% was the lowest rate for any of KEPCO's foreign currency bonds.

Hyundai Heavy Industries

In July, the company issued USD100 million in Floating Rate Notes, leveraging Barclays Capital's experience and helping the company to refinance its maturing debt.

Open for Business in Korea

In line with its commitment throughout the Asia-Pacific region, Barclays announced in December 2001 that the Financial Supervisory Commission has given its full approval for the bank to open up a branch in Korea.

Furthermore, Barclays Capital is currently in talks with Government officials in Korea to add to two new dealing and underwriting licenses to the existing brokerage license for its securities branch to complete its expansion into a fully fledged investment bank.

Operating under these licences, Barclays will be able to provide an extensive array of products, which includes the origination, arrangement and underwriting of debt; liability risk management for governments, corporations and financial institutions; investor services such as credit and rate products, as well as hedging tools; and local debt and foreign exchange trading capabilities.

To support the new bank branch and full securities branch, Barclays Capital has committed considerable resources both in terms of capital as well as introducing sophisticated trading and risk management technology, tying in the IT system with our Barclays Capital global platform to properly support our international clients.

A Bright Future

With Barclays Capital positioned to take full advantage of the country's growth and its ability to offer a comprehensive range of products and services to its clients, the future looks promising.

Barclays Capital has traditionally shown strength in arranging public non-Korean Won debt issuance for Korean sovereign and quasi-sovereign entities. In future, emphasis will be given to advising clients on a more broad-based approach to international funding, with a focus on risk management. Therefore, a new issuance will be advised in relation to its impact on the overall balance sheet and the business in general. Barclays Capital will advise clients on optimal liability portfolio management before, during and after raising finance. Extensive use of derivative products will be recommended to achieve this goal.

Barclays Capital will continue to lead the way in the diversification of debt issuance away from the public to the private sector as demonstrated by our recent FRN arrangement for Hyundai Heavy Industries. We expect domestic debt issuance to increasingly gain in importance in the short-to-medium term. This effort will be further exemplified in the domestic debt origination in the future. Once Barclays obtains the full securities branch licenses, it will focus on advising issuers on a variety of structured Korean Won debt. Barclays Capital's structuring and origination capability will be supported by its domestic bond and swap trading capability.

Barclays Capital is looking to help broaden the existing investor base for issuers by providing a wider range of structured solutions targeting the domestic market. Through derivatives it will look to increase the variety of securities which issuers can offer, thus attracting a more diversified range of investors. In the process of facilitating this issuer-investor fund channelling, Barclays Capital will mitigate the inevitable residual credit and market risk by employing credit and interest rate linked options and swaps. *

Barclays Capital offers clients a comprehensive range of services and as the bank adds to its operations, both in terms of staffing and through its applications for the two additional licences, this offering will increase.

Currently, the bank offers:

Foreign exchange services
Interest Rate Swaps, Options and Structured Rate Derivatives Solutions
Cross currency swaps and options
Money market operations
Government and corporate bonds trading
Won Derivatives Trading
Equity-linked derivatives
Liability Risk Management Solutions
Structured Finance
Won syndicated loans
Won corporate bond origination
Structured trade finance

Contact at Barclays Capital Securities Limited, Seoul Branch

Joo Jin-Sool
Tel.: (82) 2 / 2126 2600

Contact at Barclays Bank PLC, Seoul Branch

Phillip Hahn
Tel.: (82) 2 / 2126 2710

Lee Kun-Pyo
Tel.: (82) 2 / 2126 2700

Contact at Barclays Capital, Hong Kong

Stephen Diao
Tel.: (852) 2903 2706

Eugene Kim
Tel.: (852) 2903 2702

  • 07 Mar 2002

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