LG Energy raises $1 bn in bonds for EV battery production

LG Energy Solution Ltd., the world’s second-largest battery manufacturer, said on Tuesday it has raised $1 billion by selling its first global green bonds to boost battery cell production.

The issuance is comprised of five-year bonds worth $600 million and three-year bonds worth $400 million. Moody’s Investors Service and S&P Global Ratings have recently assigned Baa1 and BBB+ ratings to LG Energy bonds given the company's leading position in the global market and its stable business conditions, the battery maker said on Sept. 19.

The three-year and five-year bonds respectively attracted 114 and 186 institutional investors, and total bids are five times the offered amount, LG Energy added.

The company has set the coupon rate for three-year bonds at 100 basis points above the three-year US Treasuries, while determining that for five-year bonds at 130 bps above the five-year US Treasuries.

The sale was led by BofA Securities, Citigroup Global Markets, Morgan Stanley, Standard Chartered and the state-run Korea Development Bank.

LG Energy is accelerating moves to secure liquidity as it is pouring funds in its electronic vehicle battery manufacturing facilities. The company, which raised 9.65 trillion won ($7.3 billion) via an initial public offering in January 2022, spent 6.3 trillion won on cell production in the same year. This year, it is planning to expand the investment by more than 50% on-year.

The EV battery producer in June saw its first bond issuance in the local market 10 times oversubscribed, drawing a record 4.7 trillion won in bids for a Korean corporate bond sale.

Backed by the high competition for bids, the company increased the amount of the bonds from 500 billion won to 1 trillion won at the time.

Experts say that more global investors are looking to Korean corporate bonds as China’s real estate sector, one of the country's biggest growth engines, has faltered.

State-run Export-Import Bank of Korea issued $2.5 billion worth of global bonds on Sept. 11. State-run Korea Southern Power Co. raised $300 million in global bonds on Sept. 14, appealing to investors that it will use the funds for liquefied natural gas (LNG) generation.

In August, GS Caltex Corp. issued $300 million worth of global bonds after its debts of the same amount matured at the end of July.

Write to Hyun-Ju Jang at blacksea@hankyung.com

Jihyun Kim edited this article.