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Bond issues

LG Chem's bond issue raises over $2 bn in demand

By Feb 09, 2021 (Gmt+09:00)

LG Chem's bond issue raises over  bn in demand

South Korea-based LG Chem Ltd. received around 2.5 trillion won ($2.3 billion) worth of orders in the bookbuilding for its 600 billion won corporate bond sale on Tuesday, according to the investment banking industry on Feb. 9. It is the second-largest amount since the bookbuilding system was introduced in Korea in 2012.

Institutional investors actively participated in the bond sale driven by the company's strong growth rate. LG Chem has been performing well in its core operations, such as petrochemicals and advanced materials. Recently, the company also began making a profit in its new secondary battery business.

Three-year bonds worth 200 billion won and five-year bonds worth 250 billion won each received 860 billion won in orders. Seven-year bonds and 10-year bonds each worth 50 billion won raised 320 billion won and 310 billion won in orders, respectively.

The 15-year bonds worth 50 billion won pulled in 210 billion won in orders, four times the planned amount. Underwriters include Mirae Asset Daewoo, Shinhan Investment, Korea Investment & Securities, KB Securities and NH Investment & Securities.

LG Chem may consider increasing the size of the bond issue thanks to the overwhelming demand. The company has room to issue up to 1.2 trillion won, which would make it the largest bond issue among Korean companies.

So far, Korean chipmaker SK Hynix Inc. holds the record of the largest bond issue at 1.06 trillion won.

The fierce competition among institutional investors will allow the company to raise capital at a lower cost. LG Chem is expected to issue the bonds at a lower-than-expected interest rate.

Three-year bonds are likely to be issued with an annual 1.15% interest rate, five-year bonds with an annual 1.5% interest rate, seven-year bonds with an annual 1.71% interest rate, 10-year bonds with an annual 1.95% interest rate, and 15-year bonds with an annual 2.14% interest rate. LG Chem’s credit rating stands at AA+.

LG Chem plans to use the proceeds to make investments and repay loans. The three-year, five-year, seven-year bonds will be issued as sustainability bonds and the funds will be used to invest in carbon reduction and eco-friendly biomaterials related businesses alongside lending financial support for small business partners.

Meanwhile, the proceeds from the 10-year and 15-year bonds will be used to repay loans set to mature at the end of this month.

Write to Jin-sung Kim at

Danbee Lee edited this article.

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