South Korean borrowers are selling Swiss franc bonds at a record pace, taking advantage of increased demand from European investors for such notes on expectations that Switzerland will be largely insulated from Brexit-related trouble in the region, according to UBS Group AG.

Issuers from the Asian nation including Korea Gas Corp and Industrial Bank of Korea have sold a combined 1 billion franc ($1 billion) of notes so far this year, the most ever for the period, Bloomberg-compiled data show. The gas company became the first Korean issuer to offer Swiss franc notes with a negative yield, selling 300 million franc of bonds with a yield of minus 0.022 per cent in March, according to UBS.

“Brexit’s impact seems significant — money that fled Europe moved to the Swiss franc bond market, leaving money managers in Switzerland with excess liquidity,” said Peter Chang, the Seoul-based head of global capital markets Korea at UBS.

Swiss debt investors have far deeper pockets after financial crises in Europe and Brexit lured money into the country as a safe haven, and they are basically focused on high-grade debt, he said. Those debt buyers are looking to diversify away from European assets, he said.

Korean notes meet Swiss bond investor needs because only South Korea, along with Hong Kong and Singapore, has AA sovereign ratings or higher in Asia, according to Chang.

The Swiss bond market has been booming overall, with 19 billion franc of issuance so far in 2019, the fastest pace for the period since 2015, Bloomberg-compiled data show. Chang expects sales by Korean issuers to continue to grow, and private sector companies may also tap the market more, going forward.

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