A Top Green Bond Seller in Korea Plans Debt Boost Abroad

(Bloomberg) -- South Korea is among the world’s biggest seller of green bonds, and one of its top issuers is planning to tap the global debt market more aggressively next year to provide sustainable funds to local companies operating abroad.

Export-Import Bank of Korea, the nation’s second-largest issuer of green notes, plans to sell about $12 billion to $12.5 billion of bonds offshore in 2022, compared with around $11 billion this year, said Lee Dong-hoon, the treasurer of the bank. It expects about 20% of the issuance to be ESG debt, he said.

“We’re seeing growing demand for loans from green sectors like solar energy and rechargeable battery makers,” Lee said in an interview in Seoul. “We need to raise funds to meet the demand.”

Issuers from Korea, Asia’s fourth biggest economy, have sold the most green bonds in the region after China this year, Bloomberg-compiled data show. President Moon Jae-in’s push to make the country carbon neutral by 2050 has boosted investment in ESG projects including those by electric vehicle battery makers such as LG Chem Ltd. and SK Innovation Co.

Read more: Ethical Debt Increases Hold on Korea Dollar Bond Sales: Chart

Lee also said: 

• With major economies expected to shift their monetary policy, Kexim will pay more attention to non-U.S. currency debt markets next year such as Australian dollar and Hong Kong dollar bonds if cross-currency basis swap levels are attractive.
• Kexim expects to issue 60% of its bonds in the first half next year. For debt sales in 2022 it’s “the earlier, the better” because there are usually lower headline risks at the start of the year.
• The bank may sell bigger dollar notes than usual for public deals next year, reflecting the planned increase in its total debt fundraising.
  • Kexim has selected banks for a possible sale of dollar bonds in January, according to a person familiar with the matter.
• Credit events involving Chinese developers may continue next year, but their impact on high-grade bonds will likely be limited, and most Korean issuers have high investment-grade ratings.

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