South Korea’s Shinhan Financial Group has successfully sold $500 million in green and sustainability bonds with a maturity of in 10 years and 6 months, becoming the country’s first financial holding firm to issue foreign currency-denominated contingent convertible bonds meeting the Basel III capital requirements.
The bonds were issued at a coupon rate of 3.34 percent, 150 basis points above the 5-year U.S. Treasury note. Shinhan Financial Group drew a total of $4.3 billion orders from 200 investors, about 8.6 times more than the total issuance. By region, 34 percent of investors were from the Americas, 50 percent from Asia, and 16 percent from Europe.
Sustainability bonds are special purpose bonds that combine green bonds for environment improvement and renewable energy projects and social bonds for social projects to help low-income households and small companies.
Shinhan Financial Group said it will use the proceeds to carry out various environment, social, governance (ESG)-related projects in line with its environment vision called ECO Transformation 2020.
The bank said the latest bond sale represents a significant step towards diversification in the bond market from Asia to the U.S., expanding the scope of its interaction with investors regarding its wide-ranging sustainable business programs. Shinhan Financial Group also plans to find new business opportunities in the ESG sector as new growth drivers.
The transaction was jointly managed by Bank of America Merrill Lynch, BNP Paribas, Citigroup, Credit Suisse Group, and HSBC, and assisted by Shinhan Investment Corp.
Shinhan Financial Group was awarded an A credit rating with stable outlook from global credit rating agency Standard & Poor’s (S&P) in May. It was also the first among the country’s financial groups to receive an A1 long-term foreign currency issuer rating last year.
Source Pulse