Linklaters advises on the proposed issuance of Asia’s first public SOFR Index FRNs

Linklaters acted as US legal advisor to the underwriters on the proposed issuance of Asia’s first public Secured Overnight Financing Rate (SOFR) Index floating rate notes (FRNs) by The Korea Development Bank. The proposed US dollar SOFR Index FRNs will be issued alongside two other series of US dollar fixed rate notes. The underwriters on this novel deal are BofA Securities, Citigroup, Credit Suisse, J.P. Morgan, KDB Asia and Mizuho Securities.

With the global regulatory focus on moving away from London Interbank Offered Rate (LIBOR), SOFR has been identified as the risk-free rate to replace US dollar LIBOR. Since March 2020, the Federal Reserve Bank of New York (administrator of SOFR) began publishing a SOFR Index in order to support a successful transition away from US dollar LIBOR. The SOFR Index can be used to simplify documentation, reduce operational risk and streamline system development by allowing market participants to more easily calculate and reconcile payment amounts.

The proposed US dollar SOFR Index FRNs will be issued as green bonds. The net proceeds will be allocated towards financing and/or refinancing of new and/or existing projects from the eligible green categories as set forth in The Korea Development Bank’s sustainable bond framework.

The transaction was led by capital markets partner Hyung Ahn and counsel Daniel Kwon, with support from counsel Grace Wee and senior U.S. associate Shawn Yoon.

Linklaters is known for supporting clients on some of the most innovative and highest profile transactions, including a host of “firsts”, in the capital markets space.