Shinhan Bank Issues Korea's First $500 Million Subordinated Climate Bonds

Successful Issuance of High-Difficulty ESG Bonds

[Asia Economy Reporter Yu Je-hoon] Shinhan Bank announced on the 7th that it successfully issued a 10-year foreign currency subordinated bond worth USD 500 million as the first climate bond in Korea.

A climate bond is a green bond that obtains prior certification from the Climate Bonds Initiative (CBI) and must use the issuance funds exclusively for projects related to climate change response. It follows the most stringent standards and is a highly challenging ESG bond.

The bond issued this time is Shinhan Bank's 10th ESG bond issuance, with a fixed interest rate set at 4.375%, which is 1.85% added to the US 10-year Treasury yield. BNP Paribas, Citi, Credit Suisse, HSBC, JP Morgan, and Shinhan Investment Corp. participated as joint lead managers in the public offering.

The investor composition was distributed by region as Asia 59%, the US 25%, Europe 16%, and by type as asset management companies 69%, insurance companies 23%, sovereign wealth funds 4%, and banks/others 4%.

Despite increased market volatility due to the Ukraine crisis, inflation, and concerns over major countries' monetary policies, the issuance of the first domestic climate bond maximized participation from ESG specialized investors and was issued at a competitive interest rate, according to market evaluations.

A Shinhan Bank official stated, “Through this first domestic climate bond issuance, we dispelled investors' concerns about green-washing. It is significant in that we achieved the mid- to long-term strategic goal of expanding the investor base in terms of foreign currency procurement while also partially reducing funding costs.”

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