LG Energy Solution likely to double first bond issuance on overwhelming demand

[Courtesy of LG Energy Solution]

LG Energy Solution Ltd., the pure-play electric vehicle battery maker under South Korea’s LG Group, received nearly 5 trillion won ($3.8) in bond issuance orders from institutional investors, indicating high demand for a secondary battery-related stock.

According to multiple sources from the financial investment industry on Thursday, LG Energy Solution received 4.72 trillion won worth of subscription orders from investors during its book-building session, nine times more than its initial offering of 500 billion won.

LG Energy Solution plans to raise 150 billion won by issuing two-year debt, 150 billion won by issuing three-year debt, and 200 billion won by issuing five-year debt. All of the bonds will be issued in environmental, social, and governance (ESG) bonds.

Investors made 1.1 trillion won worth of orders for the two-year bonds, 1.74 trillion won for the three-year bonds, and 1.8 trillion won for the five-year bonds.

Industry insiders note that the company is highly likely to double the amount of its offering to 1 trillion won.

It is the first time for any company to receive more than 4 trillion won in bond orders since the book building system was introduced in 2012.

It is also the first time for LG Energy Solution to issue corporate bonds since it spun off from LG Chem Ltd. in the end of 2020. LG Energy Solution was rated AA by the agencies this month, similar to the AA+ rating of its parent, LG Chem.

LG Energy Solution said earlier that it plans to use the proceeds to obtain securities of other entities (450 billion won) and for operations (50 billion won).

The company is likely to use the funds to establish a joint venture in North America with Japan’s Honda Motor Co., Stellantis N.V., and Hyundai Motor Group.

Other Korean secondary battery manufacturers are expected to issue corporate bonds.

According to sources, EcoPro Co. with a credit rating of A- will hold a book building session on July 4 for an offering of 100 billion won.