LG Chem raises $1 billion in green bonds in largest ESG debt from Korean issuer

[Photo provided by LG Chem Ltd.]

LG Chem Ltd. has issued green bonds worth $1 billion in U.S. dollar denomination, becoming the biggest issuer of debt in environment, society and governance (ESG) theme from Korea.

LG Chem announced Tuesday that it marketed $1 billion in green bonds in two tranches—$500 million in five-year maturity and $500 million in 10 years.

The proceeds will be used to finance eco-friendly cathode materials for batteries, recycling of used plastics and renewable energy like solar power.

The company was able to offer the debt at the lowest spread among local issuers of overseas bonds upon receiving more than eight times bigger bids from institutions. The five-year notes were priced at 60 basis points over the five-year U.S. Treasury note and the 10-year debts at 90 basis points over the U.S. Treasury of the same maturity.

Favorable rating outlook helped the marketing.

Moody’s Investors Service upgraded LG Chem’s rating outlook to positive from stable last week.

The latest debt sale makes LG Chem the largest ESG-themed bond issuer in the country.

It sold $1.56 billion worth green bonds in 2019 as the first issue from a chemical maker. It also floated 820 billion won ($726.11 million) in ESG bonds in February.

“The successful sale of green bonds shows global investors’ favorable view of our sustainable business structure and its future value. We will continue to push ahead with ESG initiatives to boost our corporate value and achieve qualitative growth,” said Cha Dong-seok, Chief Financial Officer at LG Chem said.

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