The client is a public entity fully owned by the Government of South Korea.
Citi is an arranger of their MTN program and acted as a book runner for their 2024 USD benchmark issuance, supporting also their hedging activities.
Language differences demanded extra effort to scrutinize the Korea-Brazil double tax treaty.
Communication and liaison with the client on the terms and provisions of the transaction – potential termination of the note and additional amounts to be paid if the double tax treaty ceases to exist after the transaction.
Regulatory approval from the Government is required for all foreign currency denominated issuance.
Citi Korea helped the client issue through their active MTN program, the note was denominated in BRL but all cashflows were settled in USD.
The client hedged their future note cashflows using cross currency market to KRW (BRLKRW).
Cost Efficiency – Significant savings achieved from favorable market environment (BRLKRW), under their local currency financing.
Funding Diversification – Expanded into untapped Brazil capital market investors.
Good Publicity – Became the first non-policy bank sovereign entity to issue BRL bond and execute BRLKRW swap.
Attractive investment for investors – Brazil investors were entitled to local tax exemption from any interest paid by the entity qualified under Korea-Brazil tax treaty.