South Korean lender Shinhan Bank priced on October 8 a 500-million-euro (US$549 million) green bond offering, representing the first euro-denominated bond issuance and also the inaugural foreign currency-denominated green bond by a Korean commercial bank. With this deal, Shinhan Bank became the first Korean commercial bank to successfully establish its investor base in all G3 currency capital markets.
The Reg S five-year deal was priced at a spread of 70bp over mid-swap with a yield of 0.275%. The final pricing was at the tight end of the final price guidance of between 70bp and 75bp over mid-swap, and 10bp inside the initial guidance of 80bp area.
In executing the transaction, Shinhan Bank held fixed-income investors’ meetings in Europe commencing on September 17. The bank was able to garner strong interest from institutional investors, including fund managers, insurance companies, banks, central banks, and supranationals, sovereigns and agencies (SSAs).
In terms of geographical distribution, 12% of the bonds were sold in France, 10% in Germany, 10% in the Netherlands, 8% in the UK, 25% in other European jurisdictions and 35% in Asia. By type of investors, asset managers, insurance companies and pension funds, and hedge funds accounted for 60% of the paper, while banks and intermediary took 23%, and central banks and SSAs 17%.
The bonds were drawn from Shinhan Bank’s US$6 billion global medium-term note programme, with the proceeds to be used to finance or refinance eligible green projects as set out in its Sustainable Development Goals (SDGs) bond framework
BNP Paribas, Crédit Agricole CIB, Credit Suisse, HSBC and Societe Generale acted as the joint lead managers for the transaction.
In April this year, Shinhan Bank printed US$400 million Basel III-compliant tier 2 subordinated sustainable bonds, which are aligned with the SDGs.