LH Issues ESG Bonds Worth 630 Billion KRW... To Be Used for Green Remodeling Projects and More

[Asia Economy Reporter Kangwook Cho] Korea Land and Housing Corporation (LH) announced on the 25th that it issued 630 billion KRW worth of green bonds, a type of ESG bond, at interest rates 0.01~0.02% lower than market rates.

ESG bonds are bonds whose proceeds are used for investments in ESG (Environmental, Social, and Governance) sectors, and are classified into green bonds, social bonds, and sustainability bonds. The green bonds issued this time are LH's first ESG bonds issued domestically.

Previously, LH successfully issued social bonds to overseas investors for the first time among domestic companies in 2018. The total amount of bonds issued from 2018 to last year reached 960 million USD (approximately 1.1 trillion KRW). All proceeds were used for residential welfare projects such as construction and supply of rental housing, supply of purchased rental and jeonse rental housing, and operation and management of rental housing.

Green bonds must use the proceeds for green projects aimed at environmental improvement in accordance with the Ministry of Environment's "Green Bond Guidelines." They must also meet requirements regarding the use of funds, project evaluation and selection process, fund management, and post-issuance reporting obligations.

LH plans to use the entire amount raised from this green bond issuance to fund the green remodeling project for aging public rental housing and the construction of energy-saving houses with energy efficiency ratings of 1+ or higher, which are being implemented as part of the Korean New Deal policy.

NICE Credit Rating, which handled the evaluation and certification of the green bonds, determined that LH's green bond investment projects align with the Ministry of Environment's classification system under "energy efficiency improvement" and "eco-friendly construction and buildings." They also assessed that the projects would have environmental improvement effects such as energy savings and reduction of carbon dioxide emissions, awarding the highest green bond certification grade, Green 1 (very excellent).

Based on this green bond issuance, LH plans to issue additional ESG bonds domestically and internationally in the second half of the year and aims to expand the proportion of ESG bonds to 50% of total bond issuance by 2024.

An LH official stated, "We expect that this large-scale green bond issuance will contribute to revitalizing the domestic ESG bond market," adding, "We will continue to strengthen ESG management through issuing ESG bonds for rental housing green remodeling and energy-saving housing construction."

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