Korea Development Bank goes green with 500mn euro green bond issue
Offering is KDB’s first-ever euro-denominated green bond and second green bond issue since 2017
Korea Development Bank (KDB) continues South Korea’s impressive ESG (environmental social and governance) fixed income run after recently pricing its Reg S green bond offering of 500-million-euro 5-year senior unsecured note.
The offering represents the first euro-denominated green bond offering from the state lender and second green bond overall since its debut US dollar green bond in 2017. It also comes on the heels of KDB’s onshore offering raising 400 billion Korean won (US$337.7 million) from its two-year sustainability bond earlier in May.
The deal received substantial demand with over 2 billion euros in orders from 104 accounts and was priced at 28 basis points over the 5-year Euro Mid-swap rate. In terms of investor geographical breakdown, allocations were split with 24% to Benelux, 11% France, 11% UK, 10% Germany, 10% Switzerland, 24% other EMEA and 10% to Asia. Around 46% of the bond was allocated to central banks and official institutions. Net proceeds will be allocated to finance and/or refinance in whole or in part, new and/or existing projects from the eligible green categories listed in KDB’s Sustainable Bond Framework.
Citi, Credit Agricole CIB, HSBC and Standard Chartered acted as joint bookrunners and joint lead managers for the offering and KDB Asia Limited and KEXIM Asia acted as co-managers.
KDB’s transaction is just the latest deal in what has been a busy summer for South Korean issuers looking to grow and promote sustainable financing in the country. The Republic of Korea issued its first green and sustainability bonds earlier last month raising US$500 million. This was followed by the likes of KEPCO (Korea Electric Power Corporation), KHFC (Korea Housing Finance Corporation) issuing their own ESG-related bonds. South Korean financial institutions such as Kookmin Bank and Shinhan Financial Group are also aiming to raise their own sustainability bonds in the near future.
KDB recently enhanced its existing Green Bond Framework in June 2019 under its Sustainable Bond Framework incorporating project selection based on a mixture of Green Bond Principles, Social Bond Principles and Sustainability Bond Guidelines. The framework details how KDB will select projects for financing or refinancing and explains how proceeds will be managed and reported to investors.
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