Kyobo Securities Issues 20 Billion KRW in KOSPI200-Linked Derivative Bonds, Principal-Protected Products for Funding and Hedging
Kyobo Securities is issuing two tranches of equity-linked derivative bonds ELB linked to the KOSPI200 index totalling 20 billion KRW with each tranche at 10 billion KRW. The maturity is July 4 2029 and the bonds are unlisted limiting liquidity.
Investors receive principal protection at maturity or upon automatic early redemption with potential additional returns if the index is at or above 100% of the initial level. Series 50253 offers up to 26.80% return and series 50254 up to 28.95%.
The proceeds will be used for hedging transactions and investment in financial products. Kyobo Securities has a credit rating of AA- from major Korean agencies but these bonds are not covered by deposit insurance.
Kyobo's outstanding derivative issuance as of end-March 2026 includes ELS 2,781.5 billion KRW and DLS 560 billion KRW with credit conversion amount of 672,898 KRW.
[AI Summary]This ELB issuance is a routine funding and risk management activity for Kyobo Securities with limited direct impact on shareholder value. However investors face liquidity risk due to the unlisted nature and credit risk of the issuer requiring careful consideration.