Purchase orders reaching 5 times the offering amount
Moody's awards highest rating 'SQS1 (Excellent)'
LG Energy Solution Headquarters, Yeoui-daero, Yeongdeungpo-gu, Seoul. Photo by Jinhyung Kang aymsdream@
LG Energy Solution has successfully issued its first global bond (green) worth 1 billion USD (approximately 1.322 trillion KRW) since its launch.
On the 19th, LG Energy Solution announced that it had successfully completed the issuance of a total of 1 billion USD in global green bonds, consisting of ▲400 million USD (approximately 528.8 billion KRW) with a 3-year maturity and ▲600 million USD (approximately 793.2 billion KRW) with a 5-year maturity.
The issuance yields were set at +100bp and +130bp (1bp = 0.01%p) over the US 3-year and 5-year Treasury yields, respectively. This is 40bp lower than the Initial Price Guidance for each. The Initial Price Guidance refers to the expected issuance spread announced by the issuer at the start of investor order intake.
In particular, LG Energy Solution’s green finance framework, which includes plans for the use and management of the green bonds, received the highest rating of 'SQS1 (Excellent)' from Moody’s, recognizing its systematic ESG management system.
Previously, international credit rating agencies Moody’s and S&P assigned LG Energy Solution’s bond credit rating as investment grade 'Baa1 / BBB+' based on its solid position in the global battery market and stable business foundation.
Meanwhile, the global bond issuance saw participation from 114 institutions for the 3-year bonds and 186 institutions for the 5-year bonds, with orders totaling five times the amount offered. This high demand from global investors is attributed to LG Energy Solution’s active investment plans as a global battery industry leader, combined with expectations for future growth driven by benefits from the US Inflation Reduction Act (IRA).
Through this global bond issuance, LG Energy Solution plans to accelerate investments in global production facilities. During the first quarter conference call, LG Energy Solution announced that it invested 6.3 trillion KRW in global battery production-related capital expenditures (CAPEX) last year and plans to increase investments by more than 50% compared to the previous year.
Additionally, LG Energy Solution is making bold investments to expand its product portfolio beyond automotive batteries to include ESS (Energy Storage Systems). The company is currently constructing a large-scale ESS-dedicated plant with a capacity of 16GWh at its Arizona facility with an investment of 3 trillion KRW, and has announced a goal to triple ESS business division sales within five years through continuous investment.
Based on these bold investments, LG Energy Solution plans to further solidify its position as a global battery leader. As of the end of June this year, LG Energy Solution’s cumulative order backlog stands at 440 trillion KRW.
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