Lotte Rental issues maiden green SGD bond, KHNP sells $500 USD notes

South Korea’s No. 1 car rental business Lotte Rental Co. and state utility firm Korea Hydro & Nuclear Power Co. (KHNP) have joined the global bond market to ride on favorable foreign appetite for Korean debt.

According to industry banking sources on Wednesday, Lotte Rental Co. under the country’s fifth largest conglomerate Lotte Group is set to market its maiden global green bonds worth 40 million Singapore dollars ($30.13 million) to push its drive for environment, society and governance (ESG).

The SGD-denominated green and transition notes with three-year maturity will be privately placed based on the green bond framework established in February when Lotte Rental sold 250 billion won ($224.13 million) worth bonds, including 190 billion won green notes. At the time, the company scaled up its initial offering in 150 billion won after drawing 995 billion won worth bids.

The proceeds will be used to purchase electric vehicles and hybrid cars to expand its eco-friendly car rental business. The company aims to purchase as many as 4,000 new electric cars and increase the cumulative number of long-term rental contracts to 12,000 by the end of this year, it said.

Other affiliates under Lotte Group including Lotte Corp., Lotte Global Logistics, and Lotte Shopping have issued ESG-themed notes this year under the group-wide ESG initiative. Lotte Chemical is also preparing for ESG-themed bond offering later this month.

State utility Korea Hydro & Nuclear Power Co. has offered its first USD-denominated debt market in three years.

KHNP announced on Wednesday it sold $500 million worth 144A/RegS five-year fixed-rate global notes. In the book-building session led by BoA Merrill Lynch, Citigroup Global Market Securities, HSBC, JPMorgan, and UBS, the state utility firm’s new offering was oversubscribed by four times by more than 120 institutions. The issuer priced its AA rated debts at 57.5 basis points over five-year U.S. Treasury yield, better than its initial price guidance of 90 basis points over, thanks to overwhelming demand.

“Our solid (on par with sovereign) credit rating and proactive marketing strategies have helped us to tap heated demand from investors,” a KHNP official said.

Moody’s Investors Service assigned a Aa2 rating to KHNP while Standard & Poor’s affirmed it at AA level.

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