NH Bank has begun book-building on its five-year global social bond (RegS/144A), a bond issued to raise funds for projects that help to resolve social issues.

The proceeds of the bond will be used to help small and mid-size enterprises (SMEs) suffering from the affects of the coronavirus. 

The South Korean lender officially announced the issuance of the bond on July 13 and has started receiving purchase orders from investors in Asia, Europe, and the United States. The initial pricing guidance is 140 basis points (BPs) over the yield on the five-year Treasury note. 

The deal prompted NH Bank to join the ESG (Environmental, social, and governance) bond issuance boom, a new trend in the global bond market as a way for fixed-income investors to have a measurable impact on environmental and social issues.

NH Bank received a second-party opinion from Sustainalytics, a global leader in ESG research, ratings and analysis at the end of 2018, to issue green, social, and sustainability bonds before it issues its first foreign-currency denominated social bond.

The spread of coronavirus has raised interest in ESG bonds in the global financial market among domestic financial institutions. Starting with KB Kookmin Bank in April this year, IBK Industrial Bank of Korea, Korea Housing Finance Corporation and Shinhan Financial Group succeeded in issuing social bonds. 

It is the first time in two years that NH Bank has issued foreign currency-denominated bonds. It last issued a  $500 million (600 billion won) global bond in July 2018. 

NH Bank earned A1 and A+ ratings from the global credit ratings agencies, Moody’s Investors Service and Standard & Poor’s, respectively. (Reporting by Hyerim Pi)