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Treasury & Capital Markets
Scarcity, KDB guarantee underpin Hanwha Energy’s green bonds
Company issues US$300 million green bond offering to finance new and existing solar energy projects and related transmission and distribution networks
Chito Santiago 24 Jul 2019

Hanwha Energy USA Holdings Corporation (HEUH), a member of one of South Korea’s largest conglomerates Hanwha Group, launched its first-ever US dollar bond deal in the international debt capital markets when it priced a US$300 million green bond offering on July 23.

Guaranteed by Korea Development Bank (KDB), one of the country’s major policy banks, the three-year Reg S/144A issue has a coupon of 2.375% with a spread of 70bp over the US Treasuries, or at the tight end of the final price guidance of between 70bp and 75bp. The final pricing was also 25bp inside of the initial guidance of 95bp area.

HEUH is a leading developer of solar power projects primarily in North America. It is wholly-owned by Hanwha Energy, a Korean independent power producer. Together with the other affiliate companies in the Hanwha Group - namely, Hanwha Chemical which manufactures the polysilicon needed for solar panels, and Hanwha Q Cells, a manufacturer of solar modules - it is able to provide a fully integrated photovoltaic value chain to its customers.

At present, the total installed capacity of solar power projects developed and sold by Hanwha Energy is approximately 800MWdc and the total installed capacity of solar power projects being developed is approximately 9,300MWdc.

The company plans to allocate the net bond proceeds towards the financing or refinancing, in whole or in part, of new or existing renewable energy projects in accordance with the company’s green bond framework established in July 2019 with an external review from Sustainalytics, a major global provider of environmental, social and governance (ESG) research.

More specifically, HEUH intends to allocate the proceeds to expenditures related to the development, construction, installation and maintenance of solar energy production units and related transmission and distribution networks. All intended investments will be exclusively for solar energy.

The offering was actively subscribed by global fixed income investors on the back of the scarcity value of the “dark green” bond, the superior credit of KDB as the guarantor, and brand awareness of the Hanwha Group.

The total order book amounted to over US$2.3 billion from 93 accounts with 49% of the bonds distributed in the US, 47% in Asia and 4% in EMEA. By type of investors, funds accounted for 60% of the paper, banks 15%, pension funds and central banks 15%, corporate treasury 9%, and private banks and other investors 1%.

Citi, Crédit Agricole CIB, KDB and Standard Chartered acted as the joint bookrunners and lead managers for the transaction.

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