As financial market volatility rises, Korean credit card companies are rethinking funding strategies. Unlike banks, specialty finance firms in Korea do not take deposits and rely heavily on bond issuance. With rising interest rate volatility and funding costs, diversifying funding channels has become crucial.
Hyundai Card Expands Funding Portfolio
Hyundai Card, a leading Korean financial company, has been broadening its funding portfolio across offshore public bonds, syndicated loans, asset-backed securities (ABS), and Kimchi bonds. On June 17, Hyundai Card became the first Korean non-bank lender to issue a dual-currency Kimchi bond, securing funds in both U.S. dollars (USD) and Chinese yuan (CNY). The bond qualifies as a green bond under the Korean Green Taxonomy Guidelines, with proceeds supporting Hyundai Motor Group's eco-friendly mobility businesses, including electric vehicles (EVs) and fuel cell electric vehicles (FCEVs).
Reviving the Kimchi Bond Market
This issuance follows Hyundai Card's earlier Kimchi bond strategy. In January, Hyundai Card became the first Korean company in 15 years to resume public Kimchi bond issuance for converting proceeds into Korean won, effectively reopening a dormant market. Since then, LG Electronics and Lotte Property & Development have also entered the Kimchi bond market, indicating that Hyundai Card's diversification trend is spreading. Hyundai Card issued an USD 80 million Kimchi bond in February and has now expanded the structure with dollar- and yuan-denominated tranches.
Dual-Currency Bond Details
The latest Kimchi bond was issued publicly in two tranches: USD 20 million and CNY 440 million, totaling approximately KRW 128.7 billion. The dollar-denominated portion is a one-year note priced at 77 basis points over SOFR. The yuan-denominated tranche is a two-year bond with a 2.09% coupon rate. Through this dual-currency bond, Hyundai Card aims to broaden funding channels and reduce currency-specific risks. The yuan tranche is expected to attract Chinese investors increasingly interested in Korea's domestic bond market, diversifying beyond dollar-centered funding.
Kimchi Bonds and Green Financing
Kimchi bonds are foreign currency-denominated bonds issued in Korea, allowing companies to raise foreign currency without accessing offshore markets. Following regulatory easing by Korean foreign exchange authorities to ease supply-demand imbalances and reduce won depreciation pressure, Kimchi bonds have regained attention as a tool for securing foreign currency liquidity and diversifying funding. Issuance has increased, especially among credit-specialized financial firms and blue-chip corporates.
This bond also qualifies as a Korean green bond. Proceeds will support Hyundai Motor Group's eco-friendly mobility businesses, including EVs and FCEVs. Hyundai Card has used ESG bonds since its KRW 240 billion green bond issuance in 2019, the first by a Korean credit card company. On June 11, it issued KRW 160 billion in green bonds.
"Amid heightened volatility in domestic and global financial markets, the funding environment remains challenging," a Hyundai Card official said. "This dual-currency Kimchi bond issuance is expected to help us expand our investor base and diversify currency-related funding risks. The company will continue to proactively use various funding methods to secure stable liquidity and strengthen funding competitiveness."
