South Korea’s top steel company POSCO has become the first global steelmaker to issue sustainable bonds.
POSCO announced on July 9 that it succeeded in issuing five-year environment, social and governance (ESG) bonds worth US$500 million (591.50 billion won) to investors around the world on July 8. The ESG bond is a type of sustainability debt offering aimed to finance corporate activities in environmental, social responsibility and governance improvement.
To issue the bonds, the steelmaker established a sustainable financing framework in April, which specified the purpose and usage of ESG bonds and monitoring plans, in line with the green bond and social bond standards of the International Capital Market Association. Its plan was certified by Sustainalytics, a global certification institution.
The latest bond offering was underwritten by HSBC, Bank of America Merrill Lynch, BNP Paribas, and Standard Chartered Bank. Asian investors accounted for 65 percent of the subscribers, followed by American institutions at 28 percent and European investors as 7 percent. The issuance rate was set at 2.874 percent, 105 bps added to the five-year U.S. government bond rate, and the bonds will be listed on the Singapore Stock Exchange.
POSCO chairman Choi Jung-woo said, "The issuance of ESG bonds will allow POSCO to further strengthen its investment in energy and environment sectors. With the newly raised funds, POSCO will expand investment in new and renewable energy sectors related to electric vehicle battery materials, and use them for new group growth and eco-friendly projects such as joint growth activities to develop the steel industry's ecosystem.”