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Foreign currency bonds

Kia raises $700 mn in foreign green bonds

Apr 13, 2021 (Gmt+09:00)

Kia's first dedicated electric vehicle, EV6 (Courtesy of Kia) 
Kia's first dedicated electric vehicle, EV6 (Courtesy of Kia) 

Kia Corp. has issued its first foreign currency ESG bonds worth $700 million to strengthen its investment in electric vehicles and other eco-friendly initiatives.

According to the investment banking industry on Apr. 13, Kia has issued non-guaranteed, dollar-denominated green bonds for sale to global institutions based outside the US.

The bond issuance marks Kia's second foreign debt after the first set in 2017.

Of the total, $300 million worth of bonds were issued with a maturity of three years, while the other $400 million have a maturity of five and a half years.

The three-year bonds have a yield of 75 basis points above the yield on US treasuries with the same maturity, whereas the five-and-a-half-year bonds have a yield of 90 basis points above the US treasuries yield with the same maturity.

The yields for the two bonds were both 35 basis points lower than Kia’s proposed rates, respectively at 110 basis points and 125 basis points above the US treasury rates, as the new debt was oversubscribed.

Bank of America Merrill Lynch, Citigroup Global Markets Korea Securities Ltd., HSBC and Standard Chartered managed the foreign bond sale.

Kia is shifting rapidly towards future mobility this year, by expanding its product portfolio and at the same time raising money to finance its long-term projects. 

In March, the company launched its first dedicated electric vehicle, EV6, and also issued green bonds in Korea worth 300 billion won ($266 million) to finance the research and development of clean technologies. The company plans to launch seven EV models by 2027. 

Kia has also strengthened its presence outside the EV segment, posting record monthly sales figures in the US in March driven by its K3 and Sportage sales.

Prior to the bond issuance, Moody’s and S&P respectively rated Kia at Baa1 and BBB+.

Write to Hyun-il Lee and Geun-ho Im at hieuneal@hankyung.com

Daniel Cho edited this article.

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