LG Chem to raise $1.09 bln thru corporate bond offering for new investment

SEOUL -- LG Chem will issue a total of 1.2 trillion won ($1.09 billion) in corporate bonds to make new investments and improve the financial status of its new business structure following the spin-off of its battery wing which made its official debut as a separate entity in December 2020. The amount was based on a positive response shown by institutional investors in an earlier demand forecasting survey

LG Chem said that some 820 billion won would be issued in environmental, social and governance (ESG) bonds to invest in conversion to renewable energy and the reduction of carbon emission, build a production process that uses eco-friendly raw materials, and expand the production of electric vehicle battery materials, among other things.

ESG bonds will be offered as a sustainability bond, which is a hybrid of green and social bonds. Green bonds have been a key element of the development and growth of sustainable or ESG investing in fixed income. ESG refers to the three central factors in measuring the sustainability and societal impact of an investment in a business. Social bonds are to resolve social issues such as job creation, support for small and medium enterprises and help for the vulnerable.

"The successful issuance of ESG bonds is due to investors positively evaluating LG Chem's sustainable business structure and future growth, including petrochemicals, advanced materials, and life sciences, even after the spin-off of the battery business," LG Chem chief financial officer Cha Dong-seok said in a statement on February 15. LG Chem will issue 380 billion won in ordinary corporate bond to repay debt and fund facilities in the petrochemical sector.