Woori completes Korean bank’s first offshore bond settlement

Woori Bank has become the first Korean bank to complete a government bond transaction with an overseas financial institution through an international securities settlement network, marking the first such transaction by a domestic bank since authorities opened the channel earlier this year.

The bank said Thursday it sold and settled Korean Treasury bonds through an International Central Securities Depository while also conducting related foreign exchange and hedging transactions.

ICSDs, including Euroclear and Clearstream, allow global investors to trade Korean government bonds through omnibus accounts maintained at the Korea Securities Depository, eliminating the need to appoint a separate local custodian or open individual accounts.

Korean financial institutions had previously been restricted from directly supplying government bonds to foreign investors through the offshore settlement network. In January, authorities introduced guidelines allowing domestic banks and securities firms to directly trade and settle government bonds with foreign investors through ICSDs.

Korea seeks to improve access to its government bond market amid its phased inclusion in the FTSE Russell World Government Bond Index. Its inclusion began in April and is being implemented in eight equal monthly stages.

Woori Bank said the new channel would also allow it to expand business with global institutional investors by combining government bond transactions with won conversion, FX derivatives and currency hedging services.

“This transaction marks an important step in allowing Korean banks to directly provide government bonds to overseas institutional investors through global settlement networks and link those transactions with FX services,” said Choi Joon-ki, deputy general manager of Woori Bank’s Treasury Market Sales Department.

“We will expand bundled offerings that combine Korean Treasury bonds with FX and hedging services for global financial institutions, while continuing to strengthen our competitiveness in serving overseas institutional investors.”