Woori Bank to refinance US$400 mln in junior debt

SEOUL, May 26 (Yonhap) -- Woori Bank said Tuesday it will issue US$400 million in
foreign subordinated bonds and exchange them with an existing junior-ranked debt
of the same amount to calm investor worries.

Citing funding difficulties, Woori decided in February not to exercise an option
to call back the junior debt maturing in 2014, touching off concern among
investors over its financing ability.
The new subordinated bonds, to be issued late next month, will carry an interest
rate about 0.01 percentage point higher than the yield for the previous bonds,
said Woori, South Korea's third-largest lender.
Subordinated bonds are those that have a lower priority than other bonds of the
issuer in case of liquidation. Issuers can have an option to redeem them before
maturity, dubbed a call option.
Woori's old junior-ranked debt was sold in 2004 with a maturity of 10 years, with
a call option at the mid-point.
South Korean lenders were having difficulties raising foreign debt in the wake of
global financial turmoil, but their overseas borrowing conditions have improved
considerably since March, according to market watchers.
Debt investors usually purchase longer-dated subordinated bonds in expectations
that issuers would redeem them before maturity. A decision not to exercise a call
option often sparks speculation about an issuer's financial health.
sooyeon@yna.co.kr
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