이 기사는 2021년 10월 27일 08:07 thebell 에 표출된 기사입니다.

Indah Kiat Pulp & Paper (IKPP), an Indonesian pulp and paper manufacturing company, has raised $65 million through its maiden Kimchi bond sale.

IKPP has recently sold a $65 million worth 3-year Kimchi bond – foreign currency-denominated bonds issued in Korean markets – with Shinhan Investment & Securities, Korea Investment & Securities, and KB Securities managing the deal. IKPP is the crown jewel of Asia Pulp & Paper Group (APP Group), one of the largest pulp and paper companies in the world.

Most of the bond is expected to be sold in the domestic market. KB Securities issued 3-year asset-backed securities (ABS) on the same day through a special purpose company, Newstar Sinar, which has $20 million of the Kimchi bond as underlying assets. The credit rating of the ABS has improved to AA+ thanks to KB Securities’ granting of credit.

Shinhan Investment & Securities and Korea Investment & Securities are expected to sell the bond they acquired in the similar way.

APP Group’s affiliates have actively raised funds through Kimchi bond issuance since 2018. Pabrik Kertas Tjiwi Kimia (TKIM) was the first among APP Group’s affiliates that issued a Kimchi bond.

TKIM sold a Kimchi bond worth $25 million in 2018. Lontar Papyrus Pulp & Paper Industry and OKI Pulp & Paper Mills made their Korean bond market debuts in 2019 and 2020 by issuing Kimchi bonds worth $90 million and $55 million, respectively. Shinhan Investment & Securities acted as a lead manager.

Fundamentals of debut issuers have improved. IKPP, a joint venture between Indonesian and Taiwan companies, had assets worth $8.5 billion (about 10 trillion won) as of the end of 2019, which exceeds TKIM’s assets of $3 billion.

As APP Group is using U.S. dollars as its basis for accounting, it is trying to raise funds in overseas markets including Singapore and Hong Kong. It is understood that the issuance of Kimchi bonds is part of its efforts to diversify fundraising sources.

APP Group affiliates’ Kimchi bond issuance is particularly meaningful in that they continue to sell the bond despite the Covid-19 pandemic, thanks to their strong relationship with domestic securities firms.

The group has expanded its networks with domestic brokerage firms beyond Shinhan Investment & Securities, which has worked with the group since 2018. (Reporting by Hye-rim Pi)