Hyundai Capital Services, South Korea’s largest auto-finance company, has returned to the US dollar bond market, pricing green bonds amounting to US$600 million. The offering closed with a 1.25% coupon at a spread of 92.5bp above five-year US Treasuries. The coupon rate is lower than initial price guidance by 37.5bp, and the company secured the lowest spread and interest rate among all global bonds it has launched.
The new offering marked the company’s largest-ever green bonds and fifth green bond issuance in the international bond market.
Proceeds will be used for auto financial services for eco-friendly vehicles related to green projects in accordance with the company's Sustainable Financing Framework.
Hyundai Capital held its first-ever virtual roadshow in late January. During the roadshow, more than 80 investors across the United States, Europe and Asia responded positively, which, the company says, is a recognition of its strengths such as its leading market position, solid capital adequacy ratio, and strong level of affiliate support by Hyundai Motor Group.
"Despite the ongoing after-effects of Covid-19, global investors increasingly prefer to invest in social responsibility, and the market for environmental, social and governance (ESG) is booming,” says Daniel Lee, head of the finance division at Hyundai Capital.
The company established its Sustainable Financing Framework last year to ensure transparent and continuous tracking and management of project selection procedures, evaluation, use of proceeds, and follow-up reports.
It issued US$500 million green bonds in 2016 to become the first private company issuing green bonds. The deal also marked the world’s first issuance of senior green bonds in the automobile sector.
Hyundai Capital has issued bonds in diverse currencies. In addition to the Korean won and the US dollar, the currencies include Swiss franc and the Chinese renminbi. In January 2019, it issued green bonds worth 250 million Swiss francs (US$280 million), followed by 300 billion won (US$270 million) green bonds in April 2019 to become the first Korean credit finance company to issue green bonds in the Korean currency.
Over the past few years, Hyundai Capital and two other financial subsidiaries of Hyundai Motor Group – Hyundai Card and Hyundai Commercial – have issued ESG bonds worth a combined 1.87 trillion won (US$1.7 billion) in the Korean currency market and US$1.75 billion equivalent in the global market.