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LG set to fund OLED plant expansion with over $400 mn in new bonds

LG Display will likely increase its bond issues from the planned $260 million on strong demand

By Sep 07, 2021 (Gmt+09:00)

LG Display's manufacturing plants in Paju, Gyeonggi Province
LG Display's manufacturing plants in Paju, Gyeonggi Province

LG Display Co. will likely raise around 500 billion ($430 million) in new bond issues, more than its planned 300 billion won, to finance the expansion of its organic light-emitting diode (OLED) panel production lines in South Korea, according to investment banking sources on Tuesday.

As part of the South Korean display maker's recently announced plan to invest 3.3 trillion won in small-sized OLED panels for smartphones and tablets through 2024, it had planned to sell a combined 300 billion ($260 million) worth of domestic bonds.

The new issues drew 1.2 trillion won in bids, four times its target amount. The three-year bond attracted bids worth 805 billion won, far higher than the planned 200 billion won. Bids for the five-year note amounted to 415 billion won, above the planned 100 billion won. 

They will be labeled green bonds, environmental, social and governance-themed notes, because they will be pumped into eco-friendly production facilities. The bonds carry an A+ rating with a positive outlook from one of the country's two leading rating agencies.

To raise a more-than-expected 500 billion won through the new issues, LG Display is understood to offer slightly higher rates than 2.7% and 3.2%, respectively, for three- and five-year bonds. 

In comparison, the yields on South Korea's three- and five-year treasury bonds are quoted at 1.46% and 1.72%, respectively. 

The bond issuance comes after the company in August announced a plan to double its small-panel production capacity at its Paju OLED plant to 60,000 units a month to narrow its gap with segment leader Samsung Display Co.

Its affiliate and key customer LG Electronics Inc. sharply increased its first-half OLED TV market in North America

Write to Hyunil Lee at hiuneal@hankyung.com

Yeonhee Kim edited this article.

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