Funding Expansion and Continuation of ESG Investments According to ESG Management Strategy
Funds to Be Used for Construction of Rental Housing (Happy Housing, Permanent, National, 10-Year Public Rental)
Plan to Expand ESG Bonds to 25% of Total Bond Issuance This Year
Korea Land and Housing Corporation (LH) is issuing ESG (Environmental, Social, and Governance) bonds worth 530 billion KRW to be used for the construction of Happy Housing and rental housing. LH plans to expand the proportion of ESG bonds to 25% of its total funding scale this year.
On the 11th, LH announced that it issued these social bonds as part of its ESG management strategy this year to continuously invest in the ESG sector. On the 8th, LH held an ‘ESG Management Declaration Ceremony’ and declared the full adoption of ESG management.
ESG bonds are bonds whose issuance funds are used for ESG sector investments and are classified into △Green Bonds △Social Bonds △Sustainability Bonds. From 2018 to 2021, LH issued social bonds worth 1.9 trillion KRW (1.22 billion USD in foreign currency bonds and 440 billion KRW in domestic bonds) and green bonds worth 630 billion KRW.
The proceeds from social bonds are used for housing welfare projects such as △construction and supply of rental housing △supply of purchased rental and jeonse rental housing △operation and management of rental housing, while the proceeds from green bonds are utilized for △green remodeling projects of aged public rental housing △energy-saving housing construction projects.
Among the ESG bonds issued this time, the 3-year and 5-year bonds were issued at market interest rates, and the 30-year bonds were issued at 0.02% points lower than the market interest rate, successfully raising a large-scale fund of 530 billion KRW.
Recently, the domestic bond market has seen increased volatility with government bond yields rising daily due to interest rate hikes by major countries such as the U.S. and domestic supplementary budget issues, causing bond investors’ sentiment to weaken and investment to remain cautious. An LH official explained, "Despite these circumstances, LH’s success in issuing large-scale bonds is seen as recognition from bond investors of LH’s efforts and potential for realizing social value through the full adoption of ESG management as part of its national housing stability policy."
LH plans to use the funds raised this time for construction costs of rental housing buildings such as permanent rental, national rental, Happy Housing, and 10-year public rental housing currently under construction this year.
In particular, LH plans to expand the proportion of ESG bonds, including green bonds, to 25% of the total funding scale starting with this social bond issuance this year.
Kim Hyun-jun, President of LH, said, "We will actively utilize ESG bonds to build rental housing and strengthen support for low-income housing, and make every effort to implement our ESG management strategy."
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