The state-run Industrial Bank of Korea has issued a hybrid bond worth 400 billion won ($357 million), officials said Tuesday.

The hybrid bond, a kind of contingent convertible that combines debt and equity, has a maturity of 30 years. It also allows the holder a call option, or the right to redeem the bond at par after either five or 10 years from issuance.

The respective interest rate for each of the two options is 3.84 percent (at 180 basis points over 5-year Treasury) and 4.33 percent (at 200 basis points over 10-year Treasury).

By suggesting a two-way strategy, dividing the call option has attracted about 500 billion of investment, exceeding the target amount by 100 billion won, according to officials.

This is also the first time that a local bank has achieved a surplus from hybrid bonds since the adoption of the Third Basel Accord in 2013. The Third Basel Accord, or Basel III, is a global voluntary regulatory standard on bank capital adequacy and market liquidity risk.

The issuance of the hybrid bond is expected to boost the state-run bank’s BIS ratio, or the internationally recommended capital adequacy ratio, by 0.28 percentage points.

“The bank will use the corresponding funds to expand the support for small and medium-sized companies,” said a bank official.

By Bae Hyun-jung (tellme@heraldcorp.com)