A subsidiary of Korean automaker Hyundai Motor Company has issued the country’s first corporate green bond in order to facilitate financing hybrid cars.
Hyundai Capital Services, auto financing and leasing subsidiary of Hyundai, recently launched green bonds worth $500 million. The bond matures in 5 years and has a coupon rate of 2.875%. The proceeds from the green bond shall be used to finance car loans for hybrid cars.
The green bond issue attracted significant interest from global investors. Hyundai Capital Services received orders for $1.2 billion investment against the bond issue of $500 million. Around 53% of the investors were from the US and Europe, Middle East and Africa, while the rest were from Asia.
Fund managers were the largest buyers in the bond issue, comprising of 45% of the total investors. Banks and corporates represented 19% and 15%, respectively, of the total investors. Private banks comprised of 13% of the investors while the balance 9% were pension funds and insurance companies.
This is only the third green bond issued by an entity in South Korea. The Export-Import Bank of Korea (Kexim) had raised $400 million, in February this year, offering investors bonds for a 5-year period with semi-annual coupon rate of 2.125%. The offer met with overwhelming response from prospective investors who were willing to pour in $1.1 billion, or about three times the offer size.