KHFC closes Asia's third covered bond

Korea Housing Finance Corp KHFC beat choppy markets to price a $500 million covered bond early yesterday morning. The deal, which matures in five years and five months, is the third covered bond out of non-Japan Asia and is KHFC’s second deal following its debut issue last year.

Covered bonds are backed by cashflows from mortgages or public-sector loans, similar to asset-backed securities but stay on the issuer’s balance sheet, like secured bonds. Kookmin Bank issued the region’s first deal in May 2009 when it raised $1 billion and, so far, all the issuance has come from Korea.

Covered bonds are still a new asset class...