LG Chem Issues 1 Billion USD in Global Green Bonds

29th, issued 1 billion USD (app. 1.1 trillion KRW) in global green bonds at lowest spread conditions for general domestic companies

 – Issued two types of bonds simultaneously – 5 year / 500 million USD and 10 year 500 million USD maturity
– 8.5 billion USD purchase order rush, recording 5-year 60bps and 10-year 90bps

Plans to invest entire amount in ▲battery materials such as anode materials ▲eco-friendly plastic materials such as recycling waste plastics, and ▲ renewable energy-related materials such as solar power

Procured financial resources of approximately 2 trillion KRW for investments by issuing ESG bonds in the first half of this year for eco-friendly investments in the petrochemical and advanced materials sector even after spinning off LG Energy Solution

Dong Seok Cha (Executive Vice President, CFO),

“The successful issuing of the green bonds was because of the positive assessment made by investors on the future value and sustainable business structure that is in congruence with the global mega-trends such as eco-friendly plastic, battery materials, etc.”
“We will further enhance the corporate value through large-scale investments in the ESG sector and implement detailed plans for qualitative growth and to prepare for the future”

LG Chem successfully issued green bonds to accelerate its efforts for ESG (environmental, social, governance) management.

On the 29th, LG Chem announced that it issued a total of 1 billion USD (app. 1.1 trillion KRW) in global green bonds.

Green bonds are international bonds issued and distributed simultaneously in the global financial market, and the purpose of issuing the bonds are limited exclusively for eco-friendly projects and infrastructure investment such as climate change and renewable energy.

LG Chem plans to invest all of the funds procured through green bonds in ▲battery materials such as anode materials ▲eco-friendly plastic materials such as recycling waste plastics, and ▲renewable energy-related materials such as solar power.

Even after the spin-off of LG Energy Solution, LG Chem procured approximately 2 trillion KRW for investments by issuing ESG bonds in just the first half of this year to make eco-friendly investments in the petrochemical and advanced materials sectors, thus leading full-fledged investments and implementations for eco-friendly businesses going beyond ESG management of the industry that were not much more than words at the time.

LG Chem became the first chemical company in the world to issue 1.56 billion USD (1.8 trillion KRW) in global green bonds back in 2019, and then issued 820 billion KRW worth of ESG bonds in February of this year, thereby recording the largest issuing of foreign currency and KRW ESG bonds among general domestic companies.

Furthermore, with this issue of 1 billion USD (1.1 trillion KRW) of green bonds, it now has the record for the largest issue of global ESG bonds among general domestic companies at approximately 3.7 trillion KRW. (June 28, exchange rate of 1,129 KRW to 1 USD)

Dong Seok Cha (Executive Vice President, CFO) said, “The successful issuing of the green bonds was because of the positive assessment made by investors on the future value and sustainable business structure that is in congruence with the global mega-trends such as eco-friendly plastic, battery materials, etc.”

He added, “We will further enhance the corporate value through large-scale investments in the ESG sector and implement detailed plans for qualitative growth and to prepare for the future.”

Meanwhile, this green bond was issued in USD and be composed of two bonds such as 5-year maturity 500 million USD and 10-year maturity 500 million USD.

The interest rate is a fixed rate and the 5-year maturity bonds will have an interest rate of 1.480% calculated by adding 0.600%p to the US 5-year maturity treasury rate of 0.880%, while the 10-year maturity bonds has an an interest rate of 2.380% by adding 0.900% to the US 10-year maturity treasury rate of 1.480%. Accordingly, it achieved the smallest spread ever among foreign bonds issued by general domestic companies.

This is a decrease of 0.4%p (40bps) compared to the initially offered spread. (0.01%p=1bp, basis point)

Due to the rush to order purchasing of 8.5 billion USD from global institutional investors (206 institutes for 5-year and 218 institutes for 10-year) as well as the upward adjustment of LG Chem’s credit rating outlook from Baa1 ‘Stable’ to ‘Positive’ by the global credit rating company, Moody’s on the 23rd, the green bonds were issued at better conditions than expected.