Successful for Three Consecutive Years Since First Domestic Issuance in July 2023
Hyundai Capital announced on the 18th that it has issued a sustainability-linked bond (SLB) worth 200 billion won.
An SLB is a type of environmental, social, and governance (ESG) bond. Hyundai Capital became the first to issue an SLB in the domestic public bond market in July 2023. The company has continued to issue SLBs every year since then.
The newly issued bond consists of a single tranche with a three-year maturity. The joint lead managers are Kiwoom Securities and KB Securities. The issuance size has been expanded to more than double that of the previous year. The cumulative issuance amount over three years has exceeded 500 billion won.
The key feature of an SLB is that its structure changes depending on whether the issuer achieves its ESG management targets. The issuer sets sustainability goals in advance, and if these are not met, a certain level of premium is provided to investors.
These bonds are actively issued in the United States, Europe, and other regions. Unlike other ESG bonds, SLBs verify the achievement of targets through post-issuance management, which helps prevent greenwashing.
For this issuance, Hyundai Capital set the target share of eco-friendly vehicles in its new car installment and leasing products over the next three years, until the end of 2027, to be at least 3 percentage points higher than Hyundai Motor Group's domestic sales share of eco-friendly vehicles.
If the target is not achieved, Hyundai Capital will provide investors with an additional annual premium of 0.02 percentage points (2 basis points) during the investment period.
Through this bond issuance, Hyundai Capital plans to support the expansion of eco-friendly vehicle sales in line with Hyundai Motor Group's ESG strategy and to strengthen its role as a leader in green finance.
NICE Investors Service certified that the SLB issued by Hyundai Capital this time complies with the Sustainability-Linked Bond Principles (SLBP) of the International Capital Market Association (ICMA).
The agency assessed that the key components?including the selection of key performance indicators (KPIs), the setting of sustainability goals, bond characteristics, reporting, and verification?meet the requirements of the SLBP.
Lee Youngseok, CFO of Hyundai Capital, said, "Hyundai Capital was the first private company in Korea to issue a green bond in 2016, and has since issued a total of 7.6 trillion won in ESG bonds. We plan to continue to lead the issuance of various ESG bonds and the spread of eco-friendly vehicles in line with Hyundai Motor Group's ESG management policies."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
