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ESG bonds

Kia to issue green notes as part of $500 mn global bonds for future mobility

By Jan 18, 2021 (Gmt+09:00)

Kia has rebranded itself as a provider of future mobility solutions.
Kia has rebranded itself as a provider of future mobility solutions.

Kia Corp., a unit of Hyundai Motor Group, plans to issue green bonds in overseas markets to raise money for future mobility investments, including eco-friendly vehicles such as hydrogen-fueled and electric cars.

According to investment banking sources on Jan. 18, the overseas bond issue is part of its plan to raise about $500 million in global bonds sometime in the second quarter.

The automaker recently chose Bank of America, Standard Chartered Securities, Citigroup Global Markets and HSBC as its lead managers for the bond sale, the sources said.

Kia’s credit rating is BBB+, according to Fitch Ratings.

Green bonds are a type of fixed-income instrument that are specifically earmarked to raise money for climate and environmental projects. They are a form of environmental, social and governance (ESG) bonds, which have become a global investment trend.

Kia and Hyundai Motor Co., the two automaking units of the group, are also considering issuing 300 billion won ($273 million) each in green bonds in the local financial market. The bookbuilding with institutional investors will begin next month.

Backed by aggressive investments, the two companies have pledged to become leaders in the global eco-friendly vehicle market by 2025. They aim to increase global sales of hydrogen-fueled and electric cars to 670,000 units within five years.

Over the next five years, the automotive group will invest 60.1 trillion won to boost its future mobility businesses, including urban air mobility (UAM), autonomous driving, electric vehicles and hydrogen fuel cells.

In line with efforts to break away from its traditional manufacturing-driven business model, Kia recently dropped “Motors” from its name to rebrand itself as a provider of total mobility solutions.

Korean companies have increasingly been embracing ESG as a key part of their business activities, although such initiatives have often been led by state-owned firms and government-directed financial institutions.

KEPCO UNIT ALSO EYES GREEN BOND ISSUE

Korea Southern Power Co.
Korea Southern Power Co.

According to the investment banking industry on Monday, Korea Southern Power Co., a unit of Korea Electric Power Corp. (KEPCO), has also decided to issue dollar-denominated green bonds by the end of January.

The company is expected to raise between $400 million and $500 million through its first-ever green bond issue.

It has selected Mizuho Securities, Citigroup Global Markets, Credit Arigcole and UBS as managers of the bond sale.

Korea Southern Power plans to use the proceeds for investment in renewable energy facilities.

Back in 2018, the company issued 100 billion won in green bonds with a maturity of 30 years, the longest duration among ESG bonds issued by Korean companies.

Amid the growing popularity of green bonds, SK Hynix Inc. said last week that it has issued $1 billion in green bonds for its ESG projects. That is part of $2.5 billion in global bond issues aimed at financing its chipmaking businesses.

The Korean government said last week that big companies listed on the Korea Exchange will be required to disclose their ESG activities from 2025.

Kospi-listed companies with total assets valued at 2 trillion won ($1.81 billion) and more will be asked to make public their EGS activity information. The mandatory public disclosure will be extended to all companies listed on the main bourse from 2030.

Write to Jin-sung Kim at Jskim1028@hankyung.com

In-Soo Nam edited this article.

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