Hanhyewon Corporate Bonds Success... "Performing as Well as Usual Despite COVID-19"

High Stability Attracts Interest from Pension Funds, Asset Managers, and Insurers
Hanuwon: "It Means We Are Gaining Credit in the Financial Market"

[Asia Economy Reporter Moon Chaeseok] Korea Hydro & Nuclear Power (KHNP) has issued corporate bonds worth 400 billion won this month alone. KHNP expressed relief, stating that it is achieving results similar to previous years in the corporate bond market, which has become more volatile due to the spread of the novel coronavirus (COVID-19).

According to the investment banking (IB) industry on the 25th, KHNP attracted demand of 500 billion won in a corporate bond auction held on the 22nd for 5-year, 20-year, and 30-year maturities. They decided to issue 300 billion won in corporate bonds, an increase of 100 billion won from the initially targeted 200 billion won.

Although the issuance amount was increased, the issuance conditions were set 2 to 3 basis points (bp) (1bp=0.01%) lower than KHNP’s individual average market yield (the average appropriate yield level evaluated by a private bond rating company) for each maturity.

This contrasts with other companies since March, which issued bonds at yields 10 to 30bp higher than the average market yield despite receiving support from bond stabilization funds and others.

Previously, KHNP also issued 100 billion won worth of corporate bonds with 20-year and 30-year maturities on the 2nd of this month at yields lower than the average market yield.

For KHNP’s corporate bonds, pension funds and asset management companies show interest in maturities of 3 to 5 years, while insurance companies are interested in 20 to 30-year maturities.

KHNP appears relieved, noting that the situation is similar to previous years when they issued between 1 trillion and 2 trillion won in bonds.

A KHNP official said, "Issuing corporate bonds as much as in previous years despite COVID-19 means that we are gaining credit in the financial market."

The financial investment industry expects KHNP to use the raised funds for power plant investments and corporate bond repayments.

KHNP is constructing the Shin-Kori Units 5 and 6, valued at 8.6 trillion won, in Ulju-gun, Ulsan. These are large-scale national projects, each with a capacity of 1,400 MW.

They are also building Shin-Hanul Units 1 and 2 of the same scale in Uljin, Gyeongsangbuk-do. This project involves an investment of over 6 trillion won.

KHNP is also investing in renewable energy. By 2030, they plan to invest 20 trillion won to secure 7.6 GW of renewable energy facilities such as solar power.

To this end, they are promoting projects including the Incheon fuel cell (40 MW), Goheung wind power (40 MW), and the Gwangyang Green Energy (220 MW) biomass power plant.

Additionally, KHNP has planned to issue ESG (Environmental, Social, and Governance) bonds again this year, following last year.

This content was produced with the assistance of AI translation services.