POSCO Chemical to raise $244 mn in green bonds

POSCO Chemical Co., South Korean steelmaker POSCO Group’s chemical and battery material unit, said on April 8 that it will issue green bonds worth 300 billion won ($244.4 million). This is the first time for the chemical unit to issue an environmental, social and governance-type bond. 

The company raised about 800 billion won in the bookbuilding held on April 6, garnering investors’ attention by its fast-growing battery material business and AA- credit rating. Thanks to the heated interest, POSCO Chemical has decided to double its initially planned bond issuance, worth 150 billion won.    

The bonds will be comprised of five-year bonds worth 100 billion won and three-year bonds worth 200 billion won. The five-year bonds’ interest rate will be the average interest rate suggested by four Korean credit rating agencies, KIS Pricing Inc., Korea Asset Pricing Co., NICE Pricing & Information Inc. and FnPricing Inc. The three-year bond’s interest rate will be the average interest rate minus 3 basis points.

POSCO Chemical will use the funds to bolster two joint ventures between China’s Zhejiang Huayou Cobalt -- a cathode production JV and a precursor production JV established in 2018. Each JV has an annual capacity of 5,000 tons in Tongxiang in China's eastern province of Zhejiang. The POSCO unit will increase each JV’s capacity to 35,000 tons via investment. Also, the company will inject some funds in its EV battery material plant construction, which began on April 7 in Pohang, Korea.  

The company has earned the highest ESG grade GB1 from rating firm Korea Investors Service Inc. thanks to its eco-friendly battery business and financial transparency. Its efforts in reducing carbon emissions, following the Responsible Minerals Initiative (RMI) compliances for ethical sourcing of minerals and strengthening corporate philanthropic activities were highly recognized as ESG management, the company said.

Write to Kyung-Min Kang at kkm1026@hankyung.com
Jihyun Kim edited this article.