Jungjingong Issues 50 Billion KRW Social Structuring Bonds

Support for SMEs Facing Management Difficulties Due to Rising Logistics Costs and Raw Material Supply Instability

[Asia Economy Reporter Kim Cheol-hyun] The Small and Medium Business Corporation (Chairman Kim Hak-do, hereinafter referred to as SBC) announced on the 30th that it issued 50 billion won of ESG (Environmental, Social, and Governance) bonds called 'Social Structured Bonds' on the 26th, securing long-term and low-interest funds for SME policy loans.

SBC plans to use the funds raised through the bond issuance to support policy funds for small and medium venture businesses facing management difficulties due to rising logistics costs and unstable raw material supply, as well as to promote job creation.

The social structured bonds issued by SBC differ from general bonds with fixed interest rates in that they are variable rate bonds linked to interest rates. In particular, the interest rate fluctuation risk is eliminated through swap transactions in the market, effectively making them fixed-rate bonds.

SBC explained that this issuance of social structured bonds presents a new form of ESG product to the market, departing from the conventional general public bond issuance method. Additionally, by structuring the principal, face interest, and maturity according to investors' preferences, it provides investors with various ESG bond options, which is expected to revitalize the ESG bond market and expand its base.

Since issuing 110 billion won of social bonds in October 2019 to secure funds for SME policy loans, SBC has been leading the domestic ESG bond market by annually raising loan funds through ESG bonds. As of the end of October, SBC's outstanding ESG bond issuance balance stands at 13.2 trillion won.

Furthermore, in March of this year, SBC declared that it would raise and supply all funds necessary for SME policy loans through ESG bonds and has listed ESG bonds on the Korea Exchange (KRX).

Chairman Kim Hak-do stated, "Since June, SBC has played a leading role in the ESG bond market by obtaining integrated ESG bond certification, adding green bond and sustainability bond certifications following social bonds. Moving forward, we will contribute to the growth of the domestic ESG bond market and the spread of socially responsible investment in the financial market by sharing ESG bond issuance know-how with related organizations."