Korea’s ESG bond issuance sets annual record

South Korea has floated more bonds associated with environmental, social and sustainability issues this year than in all of 2020, setting an annual record in the fast-growing market, data showed Thursday.

Since January, 116 Korean entities issued green bonds, social bonds and sustainable development bonds worth a combined 60.6 trillion won ($52.3 billion), according to data compiled by the Korea Exchange.

This beat the previous annual record of 58.9 trillion won floated by 23 entities in 2020.

Korea’s sustainability-themed bond market has grown at a fast pace against the backdrop of a domestic economy that is increasingly conscious of environmental, social and governance factors. The phenomenon is being fueled by the COVID-19 pandemic and the declaration of national carbon neutrality goals for 2050.

Korean entities sold a combined 25.7 trillion won worth of themed bonds in 2019 and 1.2 trillion won in 2018.

Still, the Korean market’s reliance on social bonds persisted. Social bonds accounted for 41.5 trillion won, nearly 70 percent of the total this year to date. In 2020 they accounted for 92 percent.

Green bond issuance amounted to 10.4 trillion won during the same period. Sustainability bonds -- designed to serve both green and social purposes -- came to 8.7 trillion won.

The state-run Korea Housing Finance Corp. remained the top issuer of such bonds in 2021, followed by the Korea SMEs and Startups Agency and the Industrial Bank of Korea.

The Korea Housing Finance Corp. has raised a combined 26.2 trillion won so far this year by issuing residential mortgage-backed securities, approved as social bonds in Korea since 2019. The Korea SMEs and Startups Agency and IBK issued about 4 trillion won worth of the themed bonds.

Excluding social bond issuers, Hyundai Card, KB Kookmin Bank and LG Chem claimed the top spots in terms of green bond and sustainable bond issuance combined. Hyundai Card sold 950 billion won worth of the themed bonds, followed by KB Kookmin Bank’s 930 billion won and LG Chem’s 820 billion won.

By Son Ji-hyoung (consnow@heraldcorp.com)