The First Korean Firm to Issue Formosa Sustainability Bonds
Woori Bank announced on May 8 that it has floated US$450 million (532.13 billion won) worth of Formosa sustainability bonds in Taiwan.
A Formosa bond is a bond issued in Taiwan but denominated in a currency other than the New Taiwan Dollar. The Formosa bond sissued by Woori Bank will mature in five years and carry a floating rate of the three-month London Interbank Offered Rate, a global benchmark rate, plus a spread of 0.77 percentage point. It marks the lowest rate on Formosa bonds issued by any South Korean lender and is 0.06 to 0.07 percentage point lower than the interest on global bonds, Woori Bank said.
In particular, this is the first Formosa bonds issued by a Korean company to finance green and social projects. Sustainability bonds are issued to support the underprivileged, create jobs, develop new or renewable energy sources and finance environmental improvement projects. They also needs to go through a strict international certification procedure. Woori Bank has issued the bonds after receiving a certificate from Sustainalytics, which rates the sustainability of listed firms based on their environmental, social and corporate governance performance.
An official from Woori Bank said, “We actively explained to Taiwanese investors the bank’s financial achievements and acquisition of a certificate to issue sustainability bonds. Accordingly, we attracted subscriptions from 54 organizations worth US$1.10 billion (1.30 trillion won), which is 2.4 times higher than the amount issued. Since it is the Formosa bonds with the lowest interest rate issued by a South Korean commercial bank, it will have a positive impact on future Formosa bond sales by South Korean financial institutions.”