KB Securities Solely Leads Korea Western Power's Sustainability-Linked Bond Issuance

KB Securities announced on November 3 that it served as the sole lead manager for the Sustainability-Linked Bond (SLB) issued by Korea Western Power on October 31.

Korea Western Power issued a total of 150 billion won in corporate bonds, including a 60 billion won SLB with a five-year maturity. This marks the second case of SLB issuance by a domestic public institution, following Korea South-East Power last year.

Notably, KB Securities played a significant role in supporting the participation of a new issuer in the domestic SLB market, which is still in its early stages. Previously, KB Securities successfully led the SLB issuances for Hyundai Capital and Korea South-East Power, and has been working to enhance market participants' understanding and awareness of SLBs in Korea.

An SLB is a type of ESG (Environmental, Social, and Governance) bond, where the interest rate conditions change depending on whether the issuer achieves pre-set Sustainability Performance Targets (SPTs). Unlike traditional ESG bonds, SLBs can be issued without qualifying projects, allowing for flexible use of funds. However, they require clear and measurable Key Performance Indicators (KPIs) and specific goal setting by the issuer.

The SLB issued by Korea Western Power aims to reduce greenhouse gas emissions by at least 32.4% by 2027 compared to 2018 levels. If this target is not met, a premium of 10 basis points (2 basis points per year for 5 years; 1 basis point = 0.01 percentage points) will be paid at the time of principal repayment.

Park Jungho, Head of Corporate Finance Division 1 at KB Securities, stated, "Through its SLB issuance, Korea Western Power has clearly demonstrated to the market its strong commitment and responsibility toward greenhouse gas reduction efforts and sustainable management goals." He added, "KB Securities will continue to actively support various issuers and investors in participating in the SLB market and will take the lead in advancing the domestic sustainable finance ecosystem."

KB Securities has maintained its position as the No. 1 player in the Debt Capital Market (DCM) segment for 14 consecutive years (as of the end of 2024, according to Bloomberg), and has also established a leading position in the ESG bond lead management sector, including SLBs.

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