LG Chem Issues Largest ESG Bonds Among Domestic General Companies

ESG 820 Billion KRW, General Corporate Bonds 380 Billion KRW

[Image source=Yonhap News]

[Asia Economy Reporter Yoonju Hwang] LG Chem is issuing the largest ESG bonds among domestic general companies.

On the 15th, LG Chem announced that it will issue a total of 1.2 trillion KRW in corporate bonds, including 820 billion KRW in environmental, social, and governance (ESG) bonds and 380 billion KRW in general corporate bonds. This is the largest scale ever for ESG bonds issued by general companies as well as the total corporate bond issuance. The previous record for ESG bonds was 500 billion KRW issued by Hyundai Steel last month.

LG Chem explained that the issuance of ESG bonds in the 800 billion KRW range is expected to serve as a turning point for the industry’s ESG management, which had remained declarative, to shift into a stage of active investment and execution.

As a result of a demand forecast conducted on the 9th targeting institutional investors for LG Chem’s corporate bonds, a total of 2.56 trillion KRW, the second largest amount ever, was attracted. Encouraged by the successful demand forecast, LG Chem decided to double the originally planned issuance of 600 billion KRW.

LG Chem’s ESG bonds will be issued as Sustainability Bonds, which combine Green Bonds and Social Bonds. ESG bonds are issued for socially responsible investments in environment, social, and governance areas.

LG Chem plans to use all funds raised through ESG bonds for ▲ investments in renewable energy transition to reduce carbon dioxide emissions ▲ construction of production processes using eco-friendly raw materials ▲ expansion of electric vehicle battery materials such as cathode materials ▲ expansion of quality control facilities for polio vaccines ▲ improvement and replacement of industrial accident prevention facilities ▲ financial support for win-win growth with small and medium-sized partner companies.

LG Chem prioritizes sustainability as its top management task and is accelerating ESG management by discovering business models that can provide innovative and sustainable solutions for the environment and society, such as ▲ recycled plastics ▲ biodegradable resins ▲ biodiesel-based eco-friendly resins ▲ next-generation polio vaccine supply.

LG Chem CFO Vice President Dongseok Cha said, "This year, we will establish and implement concrete plans to accelerate ESG management across all business divisions and further solidify our position as a leading company in the sustainability field."

Meanwhile, the 380 billion KRW in general corporate bonds issued together will be used for debt repayment and facility funds for the petrochemical sector.

LG Chem’s corporate bonds consist of 350 billion KRW with a 3-year maturity, 270 billion KRW with a 5-year maturity, 200 billion KRW with a 7-year maturity, 260 billion KRW with a 10-year maturity, and 120 billion KRW with a 15-year maturity. Among these, the 3-year, 5-year, and 7-year bonds will be issued as ESG bonds. The 3-year, 5-year, 7-year, and 10-year maturities are expected to have interest rates similar to the individual market average rates, while the 15-year maturity is expected to have an interest rate 0.20 percentage points lower than the individual market average rate. The final fixed interest rate will be decided on February 18.