LG Chem to issue foreign currency bonds worth up to US$1 billion

LG Chem is pushing for the issuance of foreign currency bonds worth up to US$1 billion.

LG Chem is pushing for the issuance of foreign currency bonds worth up to US$1 billion. The company reportedly intends to use the funds raised to invest in facilities to reduce carbon dioxide emissions and build production processes using environmentally friendly raw materials.

The company recently selected Bank of America, BNP Paribas, Citigroup, HSBC, Standard Chartered Bank and Korea Development Bank (KDB) as lead managers for the issuance of three-year green bonds worth $500 million to $1 billion. The demand forecast is due next week after a call to global investors from July 5. As LG Chem held an 81.84% stake in LG Energy Solution at the end of the first quarter, foreign institutional investors have high interest in selling bonds.

LG Chem has secured trillions of cash in the Korean corporate bond market every year. Its corporate bond issuance last year also topped 1 trillion won. This year, however, it has yet to issue any bonds. Experts say LG Chem refrained from issuing bonds as the corporate bond spread widened following interest rate hikes in 2022.

LG Chem’s public currency bond offering will be the third after those in 2019 and 2021. In 2019, it raised US$1 billion in 5.5-year and 10-year bonds, and the year last, it raised US$1 billion in five years. and 10-year bonds.

However, this year LG Chem shortened the maturity and reduced the issue volume as it became difficult to secure long-term investment demand.

Meanwhile, global credit rating agencies have assigned a BBB+ credit rating to LG Chem’s foreign currency bonds to be issued this time. Moody’s expects LG Chem’s earnings before interest, tax, depreciation and amortization (EBITDA) to remain at 6.5 trillion won to 8 trillion won a year.

Standard & Poor’s (S&P) said LG Chem’s borrowing (6.6 trillion won at the end of March) is at a low level, meaning risks for senior unsecured bondholders are limited.

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