Hyundai Steel bumps up its first ESG bond offering on explosive demand
South Korea's Hyundai Steel Co. has bumped up its first-ever environment, society and governance (ESG) bond issues to 500 billion won ($453.5 million) after its initial offering attracted overwhelming investor interest during a book building session.
The steel-making arm of Hyundai Motor Group announced in a regulatory filing on Tuesday that it is issuing 500 billion won worth green bonds after its original 250 billion won offering drew 2.07 trillion won from institutional investors, which is more than eight times oversubscribed, during a book session.
The company will issue 130 billion won in three-year bonds, 230 billion won in five-year maturity and 140 billion won in seven-year maturity with their prices set below 17 basis points (bps), 22 bps, and 23 bps than the market average, respectively. The company will float all the three trenches on Jan. 25.
Green bond is a type of ESG debts issued for the purpose of socially responsible investment. Its use is limited to green industry-related purposes such as carbon reduction, energy efficiency, renewable energy and other eco-friendly projects.
It is the first ESG bond issuance by the company and among Hyundai Motor Group affiliates except financing business. Hyundai Steel’s unsecured green bond was granted GB1(E1/M1), the highest credit rating evaluated by Korea Investors Service.
Hyundai Steel plans to use the fund to cover environment-related project costs. Key projects include the introduction of a heat recovery system and improvement of facilities for exhaust gas desulfurization and denitrification to reduce greenhouse gas emissions.
Hyundai Steel has so far used a wet cooling system that relies on cooling water but decided to replace it with a coke dry cooling system (CDQ) to utilize waste heat generated during the cooling process.