Steel giant POSCO raises $500 mn in 3-year green bonds

The Korean firm will build new electric furnaces in Gwangyang by 2026 to produce 2.5 million tons of steel a year

POSCO facilities in Gwangyang, South Korea (Courtesy of POSCO)

Sang Hoon Sung 1

2024-01-17 17:25:31 uphoon@hankyung.com

ESG bonds

POSCO raised $5 million in three-year green bond sales on Jan. 16 to invest the proceeds in domestic facilities, the largest steelmaker in South Korea said on Wednesday.

The company started attracting investors on Jan.3 in the Asian market and set the bond rate at US three-year Treasury rate plus 110 basis points. Around 200 institutional investors placed orders worth $4 billion, POSCO said.

Bonds were priced at a 1.1% credit spread and a 4.875% coupon rate.

POSCO will use the funds to build new electric furnaces by 2026 at its steel mill in Gwangyang, a port city about 300 kilometers south of Seoul. The company aims to produce 2.5 million tons of steel a year from the upgraded facility.

To meet the 2050 carbon neutrality goal, the furnace will control the use of scrap under steel sector criteria by the Climate Bond Initiative (CBI), a global organization to mobilize capital for climate action.

S&P Global and Moody’s set the credit ratings on POSCO bonds at Baa1 and A-, respectively, at the end of last year.

Write to Sang Hoon Sung at uphoon@hankyung.com

Jihyun Kim edited this article.