LG Energy Solution, the second-largest battery manufacturer globally, announced on Tuesday that it has successfully raised $1 billion through the sale of its first global green bonds. The funds raised will be utilized to enhance the production of battery cells. The issuance comprised of $600 million worth of five-year bonds and $400 million worth of three-year bonds.
The credit rating agencies, Moody’s Investors Service and S&P Global Ratings, assigned Baa1 and BBB+ ratings respectively to the LG Energy bonds. These ratings reflect the company’s leading position in the global market and its stable business conditions.
The sale of the bonds generated significant interest, with the three-year and five-year bonds attracting 114 and 186 institutional investors respectively. The total number of bids received was five times the offered amount. To determine the coupon rates, LG Energy set the rate for the three-year bonds 100 basis points above the three-year US Treasuries, while the rate for the five-year bonds was set at 130 basis points above the five-year US Treasuries.
The bond sale was led by BofA Securities, Citigroup Global Markets, Morgan Stanley, Standard Chartered, and the state-run Korea Development Bank. LG Energy has been actively securing liquidity as it invests in the manufacturing facilities for electronic vehicle batteries. In 2022, the company raised $7.3 billion through an initial public offering and subsequently invested $6.3 billion in cell production. This year, LG Energy plans to further increase investments by over 50%.
The strong demand for LG Energy’s bond offering can be attributed to growing international interest in Korean corporate bonds, particularly as China’s real estate sector faces difficulties. Other Korean companies, such as the State-run Export-Import Bank of Korea and Korea Southern Power Co., have also recently raised funds through global bond issuances.
In conclusion, LG Energy Solution has successfully raised $1 billion through its first global green bond sale. The proceeds will be used to expand battery cell production, as the company continues to pursue growth in the electronic vehicle battery manufacturing sector.
– Green bonds: Financial instruments used to raise capital for projects with environmental benefits.
– Credit rating agencies: Institutions that assess the creditworthiness of borrowers and assign ratings based on their ability to meet financial obligations.
– LG Energy Solution
– Moody’s Investors Service
– S&P Global Ratings