Hyundai Capital announced on the 26th that it has successfully issued an Asset-Backed Security (ABS) with ESG certification, making it the first private company in South Korea to achieve this milestone.
In October of last year, Hyundai Capital issued an ABS worth 1 trillion won, the largest issuance by a non-banking finance company in the last decade. This year, they followed up with the issuance of a 600 billion won ABS backed by new car installment receivables. The underwriting was managed by KB Securities, Korea Investment & Securities, and Korea Asset Investment Securities.
Most notably, this ABS issuance is significant as it marks the first instance of an ESG-certified ABS from a private company in South Korea.
According to a representative from the underwriting firms, “Many investors are seeking values such as carbon neutrality and environmental friendliness, leading to a preference for ESG bonds. Hyundai Capital’s issuance of the ‘ESG Certified ABS’ presents a valuable opportunity to secure a diverse investor base in the relatively small ABS investment market compared to the general corporate bond market.” Hyundai Capital also received an exemption from listing fees and annual charges from the Korea Exchange, which is promoting the active issuance of ESG bonds.
This ABS issuance was structured whereby Hyundai Capital entrusted its new car installment receivables to Citibank (the trustee), and Citibank issued revenue certificates worth 600 billion won to Hyundai Auto Funding, a special purpose company (SPC), based on the trust assets. In response to this issuance, Hyundai Capital changed the name of its SPC from ‘Autopia’ to ‘Hyundai Auto Funding’, enhancing investor confidence as a financing arm of the Hyundai Motor Group.
Lee Hyung-seok, Chief Financial Officer of Hyundai Capital, stated, “Following our public issuance of South Korea’s first sustainability-linked bond (SLB) last year, we are once again positioning ourselves as a leading financial institution in ESG management in Korea by being the first private company to publicly issue an ABS with ESG certification. I assure you that Hyundai Capital will continue to lead in the issuance of various ESG bonds in line with the Hyundai Motor Group’s social responsibility message of ‘moving towards a sustainable future.'”
Inquiries: Lee Sang-jin (daedusj@autodiary.kr)