POSCO has become the first global steelmaker to issue sustainable bonds. POSCO succeeded in issuing five-year, $500 million worth of environment, social and governance (ESG) bonds to investors worldwide on July 8.
ESG bonds are bonds that are issued with the aim of raising funds for environment-friendly, social responsibility and governance improvement. POSCO has issued a sustainability bond that combines Green Bonds to finance eco-friendly projects and social bonds to finance social problems such as job creation.
POSCO Chairman Choi Jung-woo said, "The issuance of ESG bonds will allow POSCO to further strengthen its investment in energy and environment sectors," adding, "With the newly raised funds, POSCO will expand investment in new and renewable energy sectors related to electric vehicle battery materials, and use them for new group growth and eco-friendly projects such as joint growth activities to develop the steel industry's ecosystem."
To issue the bonds, POSCO established the Sustainable Financing Framework in April in line with the Green Bond and Social Bond standards of the International Capital Market Association and received the certification from Sustainalytics, a global certification institution, to meet the global standards.
Global investors showed high interest in POSCO's excellent business performance, good credit ratings (Moody's Baa1 stable, S&P BBB+ positive) and international recognition, despite recent concerns over slowing global economic growth, a U.S.-China trade dispute and higher volatility in U.S. bonds interest rates.
With HSBC, BAML, BNP Paribas and SCB participating as the organizer, investors from around the world, including 65 percent from Asia, 28 percent from the U.S. and 7 percent from Europe, showed an even interest in issuing POSCO's ESG bonds.
The issuance rate was set at 2.874 percent, adding 105 bps to the five-year U.S. government bond rate, and the bonds will be listed on the Singapore Stock Exchange.
Meanwhile, POSCO was assessed to have made efforts to meet the high interest and expectations of the global financial market in social responsibility investment (SRI) through the issuance of ESG bonds.