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ESG bonds

Korean Air to issue first ESG bonds among Korean carriers

Proceeds will be used to buy eco-friendly Boeing 787 models

By Jun 23, 2021 (Gmt+09:00)

Korean Air's eco-friendly Boeing 787-9 plane
Korean Air's eco-friendly Boeing 787-9 plane

Korean Air Lines Co. will issue green bonds as part of its 200 billion won ($176 million) corporate debenture issue -- to become the first among domestic carriers to float the so-called environmental, social and governance (ESG) bonds.

According to industry officials on June 23, the national flag carrier plans to conduct a bookbuilding process to gauge demand for its planned corporate bond issue later this month.

The company may increase the size of the bond issue if demand is stronger than expected, they said.

Some of the bonds will be issued in the form of ESG bonds, a type of sustainability debt offering aimed at financing corporate activities in environmentally friendly and sustainable projects.

Korean Air, the country’s largest full-service carrier, plans to use the proceeds to buy eco-friendly aircraft such as the Boeing 787-9, which is built using advanced carbon-composite materials and aluminum alloy, thus raising fuel efficiency and emitting less greenhouse gas.

Korean Air's eco-friendly Boeing 787-9 plane
Korean Air's eco-friendly Boeing 787-9 plane

The airline started buying the jets in February 2017 and currently operates 10 units of the B787-9 model.

Korean Air is also considering buying the upgraded Boeing 787-10 models, according to industry officials.

The company last floated a corporate bond in April to the tune of 350 billion won.

Write to Kyung-Min Kang at Kkm1026@hankyung.com

In-Soo Nam edited this article.

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