Shinhan Bank is raising US$5 billion through the issuance of covered bonds backed by Korean residential mortgage loans, with BNP Paribas as the sole arranger.

The Seoul-based commercial lender will issue both benchmark and private placement covered bonds in multiple currencies to further diversify its investor base and funding profile.

The bonds have been approved for listing by the Singapore Exchange Securities Trading Limited (SGT-ST), and are expected to be rated "Aaa" by Moody’s Investors Service and “AAA” by Fitch Ratings.

“This inaugural global covered bond programme is a milestone for Shinhan Bank as it paves the way for a wider participation by investors in the future,” says Hyun Shik Park, the bank’s head of capital markets and trading division, adding that the bonds will be issued in offshore markets early next year, subject to market conditions.

Andy Lai, head of asset finance and securitization, Asia-Pacific, global markets, at BNP Paribas, notes that covered bonds provide protection afforded by dual recourse to the issuer and the cover pool of underlying assets.

“BNP Paribas has served as arranger of all international covered bond programmes in Korea since 2010. We are proud to be acknowledged as the go-to bank for covered bonds in Korea and Asia-Pacific,” Lai adds.