Hyundai, Kia to raise $921 mn in green bonds for future mobility

Hyundai Motor Co. and Kia Motors Corp. plan to issue green bonds worth a combined 1 trillion won ($912 million) as they gear up to raise money for future mobility investments, including eco-friendly vehicles such as hydrogen-fueled and electric cars.

The two South Korean automakers will issue over 300 billion won ($273 million) worth of green bonds each, which may increase to around 500 billion to 600 billion won if the bookbuilding results look favorable, according to investment banking sources on Jan. 11.

Hyundai Motor and Kia will soon mandate underwriters to kick off the bond issue. Green bonds are special-purpose bonds issued to raise funds for eco-friendly projects such as those involving renewable energy or electric vehicles.

This is the first time for the two companies to issue environmental, social and governance (ESG) bonds.

Backed by aggressive investments, Hyundai Motor and Kia have pledged to become leading players in the global eco-friendly vehicle market by 2025. They aim to raise global sales of hydrogen-fueled and electric cars to 670,000 units within five years.

Over the next five years, Hyundai Motor will invest 61.1 trillion won ($55.7 billion) to boost its future mobility businesses, including urban air mobility (UAM), autonomous driving, electric vehicles and hydrogen fuel cells.

Hyundai Motor is also taking center stage, given the likelihood that it will develop self-driving EVs via partnerships with global companies. Last week, Hyundai Motor announced plans to build its first overseas hydrogen fuel cell systems plant in Guangzhou, China, as part of its aim to transform into a world-leading future mobility provider.

It was also reported that the Korean automaker is in the early stages of discussions with Apple Inc. to jointly develop and produce self-driving electric cars.

Increased participation in ESG bond issues from Hyundai Motor's affiliates is expected as ESG becomes an important criterion in the Korean automotive group's growth strategy, investment banking industry sources say.

Hyundai Steel Co. is also slated to issue 250 billion won ($228 million) worth of green bonds for the first time at the end of this month.

Until last year, Hyundai Card Co. and Hyundai Capital Services Inc. were the only financial affiliates of the Korean automotive group to issue ESG bonds, but this year, the group's manufacturing affiliates are expected to show active participation in the ESG bond market.

Write to Jin-sung Kim at jskim1028@hankyung.com
Danbee Lee edited this article.