LG Energy Solution Raises $1 Billion through Green Bonds to Boost Battery Production

LG Energy Solution, the world’s second-largest battery manufacturer, has raised $1 billion through the sale of its first global green bonds. The issuance consists of $600 million worth of five-year bonds and $400 million worth of three-year bonds. This move aims to support the company’s battery cell production.

Moody’s Investors Service and S&P Global Ratings have assigned Baa1 and BBB+ ratings to LG Energy’s bonds, respectively, acknowledging the company’s leading position in the global market and stable business condition. The three-year and five-year bonds attracted 114 and 186 institutional investors, respectively, with the total number of bids being five times the offered amount.

The coupon rate for the three-year bonds is set at 100 basis points above the three-year US Treasuries, while the rate for the five-year bonds is determined at 130 basis points above the five-year US Treasuries. The issuance was led by BofA Securities, Citigroup Global Markets, Morgan Stanley, Standard Chartered, and the state-run Korea Development Bank.

LG Energy Solution is focusing on securing liquidity as it invests in electronic vehicle battery manufacturing facilities. After raising $7.3 billion through an initial public offering in January 2022, the company spent $6.3 billion on cell production in the same year. This year, it plans to increase its investment by more than 50% compared to the previous year.

The high demand for LG Energy’s bonds reflects the growing interest of global investors in Korean corporate bonds, as the Chinese real estate sector, one of the country’s major growth engines, has experienced setbacks. In June, LG Energy’s bond issuance in the local market was oversubscribed 10 times, attracting a record 4.7 trillion won in bids.

Other Korean companies, such as the State-run Export-Import Bank of Korea and Korea Southern Power Co., have also issued global bonds, appealing to investors with their respective projects. This trend indicates a shift in investor focus towards Korean corporate bonds.

Overall, LG Energy Solution’s successful issuance of green bonds demonstrates its commitment to expanding battery production and meeting the increasing demand for electronic vehicles. The proceeds from the bond sale will further strengthen the company’s position in the global market.

Sources: Moody’s Investors Service, S&P Global Ratings