Citi takes lead in green bond issuance in Korea

The headquarters of Citibank Korea in Seoul / Korea Times file

Citibank Korea has gained attention in the green bond market as it has played a dominant role as a lead manager in issuing ESG (environmental, social and corporate governance) bonds through its subsidiary Citigroup Global Markets Korea Securities for the Korean government and major companies.

In Korea, the total amount of ESG bond issuance, including green bonds, increased from $500 million in 2013 to $9.3 billion in 2019.

The volume is expected to grow further, as the government encourages green bond issuance and, at the same time, large enterprises and financial institutions have a keen interest in issuing ESG bonds, including green bonds.

In December 2019, the number of green bond issuances managed by Citi in Korea is 12, worth $6.4 billion.

This amount is equivalent to 22 percent of Citi's green bond issuance volume in the Asia-Pacific region ― the second-largest next to China.

One of the major deals in which Citi participated as a lead manager this year was LG Chem's green bond issuance ($1 billion and 500 million euros), which was the first green bond by a chemical company globally financing its EV battery development and other businesses.

Among lead managers in the deal, Citi was the sole green structuring adviser.

This deal has drawn huge attention from major international media, receiving Korea's Country Deal Award at FinanceAsia's Achievement Awards for 2019 and being recognized as the Best Corporate Bond in the Korea Sustainable Finance category at the Asset Triple A's “Asset Country Awards 2019.”

In June this year, Citi, as a lead manager, was involved in the Korean government's ESG bond issuance worth $500 million.

The bond was the first of its kind led by the government to limit the purpose of funding to only Green projects and Socially Responsible Investment (SRI). This special-purpose bond was issued with a five-year maturity and yields 30 basis points higher than U.S. government-bond yields.

“Korean companies' ESG bond issuance is forecast to grow steadily, as they are increasingly interested in eco-friendliness and corporate social responsibility. As a good partner, Citi will continue to provide support to companies in issuing ESG bonds,” said June Won, managing director of Citigroup Global Markets Korea Securities.