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, 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”. 1
1 Sustainalytics’ “Second party opinion” report is available at https://www.sustainalytics.com/wp-content/uploads/2018/09/KHFC-Social-Bond-SPO-09072018-FINAL.pdf
Lim Wei Shan
ING Bank N.V., Singapore Branch
+65 6539 7895 / +65 9027 3744
ING is a global financial institution with a strong European base, offering banking services through its operating company ING Bank. The purpose of ING Bank is empowering people to stay a step ahead in life and in business. ING Bank’s more than 52,000 employees offer retail and wholesale banking services to customers in over 40 countries.
ING Group shares are listed on the exchanges of Amsterdam (INGA NA, INGA.AS), Brussels and on the New York Stock Exchange (ADRs: ING US, ING.N).
Sustainability forms an integral part of ING’s strategy, evidenced by ING’s ranking in the banks industry group by Sustainalytics. ING Group shares are included in the FTSE4Good index and in the Dow Jones Sustainability Index (Europe and World), where ING is also among the leaders in the banks industry group.
ING in Asia
In Asia Pacific, ING offers wholesale banking across 14 markets, namely Australia, China, Hong Kong SAR, India, Indonesia, Japan, Malaysia, Mongolia, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.
ING’s regional presence includes a 13% stake in Bank of Beijing, China; a 30% stake in TMB Bank, Thailand; a 3.74% stake in Kotak Mahindra Bank, India as well as wholly owned ING Australia that offers retail and wholesale banking services.
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