April 19, 2024

LG Completes Issuance of Public Foreign Bonds

SEOUL, Apr. 19, 2024 – LG Electronics (LG) has successfully issued a global bond of USD 800 million, marking its first in 17 years. Despite the growing global volatility, LG managed to achieve a negative New Issue Premium (NIP), indicating strong interest from global institutions. 

The bonds are denominated in U.S. dollars and divided into two categories: a USD 500 million bond with a 3-year maturity and a USD 300 million bond with a 5-year maturity. The 5-year bond is classified as a Sustainability Bond. 

The additional interest rate, or spread, is set at 95 basis points (bp) and 110bp above the US Treasury bond interest rate for the 3-year and 5-year bonds respectively, 40bp lower than the initially proposed spread. 

LG received a substantial investment order of approximately USD 9.4 billion (around 12 times the size of the issuance) from a total of 339 institutions. This achievement, based on the maximum order book, marks LG’s bond issuance as the most successful among Korean corporate bonds in 2024, resulting in a negative NIP. 

LG’s strong performance and financial stability have been recognized by global investment institutions, despite the decrease in expectations for a U.S. interest rate cut and increased global instability due to the Iran-Israel conflict. LG continues to show steady performance and is diversifying its portfolio, transitioning from a leading home appliance company to a Smart Life Solution company incorporating EV components, B2B and platform-based services. 

The foreign currency bond issuance is positive for LG in terms of stable fund raising and diversification of borrowing sources. The successful re-entry into the dollar bond issuance market after a 17-year break underscores LG’s strong presence in the global financial landscape.

The funds raised aim to enhance LG’s future competitiveness through R&D and facility investments, in line with its 2030 Future Vision. The Sustainability Bond’s proceeds will be used for eco-friendly and social projects, including the construction of eco-friendly buildings. 

The issuance was managed by a consortium of banks, including BNP Paribas, Citigroup, HSBC, JP Morgan, KDB and Standard Chartered Bank. LG has received stable credit ratings of Baa2 from Moody’s and BBB from Standard & Poor’s. 

This issuance marks LG’s return to the public foreign bond market after 12 years, following its 2012 issuance of Swiss franc bonds valued at 215 million (equivalent to KRW 2.6 trillion at the time). 

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