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Woori Bank-debt sale

Woori Banks sells ESG bonds worth 400 bln won

SEOUL, July 12 (Yonhap) -- Major South Korean lender Woori Bank said Tuesday it has issued subordinated environment, social and governance (ESG) bonds worth 400 billion won (US$305 million) as part of efforts to boost financial health and fulfill its social responsibility.

The 10-year bonds carry a fixed annual interest rate of 4.46 percent, or the yield on 10-year Treasurys plus a spread of 1.10 percentage points, the lender said. It represents the lowest interest rate on subordinated bonds offered by local banks this year

Woori Bank said it had planned to float 270 billion won worth of ESG bonds, but the debt sale has been 1.5 times oversubscribed thanks to keen investor interest. The amount also marks the largest subordinated bond sale this year among domestic banks.

ESG bonds are a type of sustainability debt offering aimed at financing corporate activities in environmentally friendly and sustainable projects.

Subordinated bonds refer to debts that yield higher returns to investors but have the lowest priority of being redeemed with no state-backed deposit protection in case of the issuer's liquidation. The proceeds from their sales are counted as capital.

Woori Bank, the flagship of major banking holding firm Woori Financial Group Inc., expected the latest bond sale to lift its capital adequacy ratio by 0.25 percentage point to 15.85 percent.

The Switzerland-based Bank for International Settlements, an international organization of central banks, advises lenders to maintain a ratio of 8 percent or higher.

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