ING participates in Asia’s first social covered bond for Korea Housing Finance Corporation
ING and Korea Housing Finance Corporation (KHFC) have worked together to deliver the inaugural social covered bond in Asia. KHFC is a state-run enterprise responsible for enhancing the welfare of people and national economic development by supporting the Korean government’s housing welfare policy.
The proceeds of the social covered bond will be used to finance or refinance KHFC’s mortgage loan products, aimed towards providing stable and long-term housing finance in Korea. These include the Bogeumjari Loan and Didimdol Loan, which are designed to support moderate to low income households with an affordable mortgage loan and their first home purchase respectively.
ING acted as a joint lead manager and joint bookrunner for this five-year EUR 500 million bond, and is part of a syndicate of four banks. The bond issuance is backed by Korean residential mortgages, and rated AA2 by Moody’s and AA- by Fitch Ratings.
This is KHFC’s inaugural bond denominated in euros and will enable KHFC to diversify away from the US dollar as a funding source.
“We are thankful to KHFC for firstly having the vision to adopt a social covered bond framework, and for working with ING to make it happen. Given the high cost of home ownership, and at times inadequate access to housing loans locally, we hope this bond will increase accessibility to affordable housing finance in South Korea,” said Young Chang Son, branch manager of ING Bank Seoul Securities.
This social covered bond issuance marks a significant first for ING in Asia Pacific, as the bank continues to deliver new sustainable financing solutions for its clients. Alongside the growing number of green loans and bonds that ING has delivered in the region, the bank has now completed Asia’s first social covered bond.
This bond issuance follow’s KHFC’s initial development of their social covered bond framework earlier in Q3 2018. The framework was prepared in compliance with the International Capital Market Association (ICMA)’s Social Bond Principles.
ING has been contributing to the development of ICMA Social Bond Principles which was introduced in 2017. This includes the introduction of guidelines for social bond impact reporting in June 2018, which aims to advance discussions on impact among issuers and investors for social projects.
The KHFC’s social covered bond is a good example how capital markets can address global challenges such as those exemplified in the United Nation’s Sustainable Development Goals (SDGs) through existing and new pool of liquidity. This social covered bond in particular is aligned with the UN SDG 11: Sustainable Cities and Communities.
A leading sustainability rating agency, Sustainalytics, has evaluated the transaction in a ‘Second-party Opinion’ report and acknowledged the social covered bond framework is “credible and impactful, and aligns with the four core components of the Social Bond Principles 2018”.
Lim Wei Shan, ING Bank N.V., Singapore Branch
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