Filthy Air Pushes South Korean Industry to Sell Green Bonds

(Bloomberg) -- South Korea, the country with the most polluted air among Organisation for Economic Cooperation and Development members, is joining a global boom in green finance.

As dirty air stings eyes and throats, pressure is mounting on some of the most heavily polluting industries to find money for cleaner technologies. Energy, power and other borrowers have more than doubled issuance of so-called environmental, social and green bonds to 12.9 trillion won ($10.8 billion) this year from all of 2018.

Some recent examples:

• Oil refiner GS Caltex Corp. sold 130 billion won of green bonds in October to fund equipment to reduce pollution, especially fine dust.
• SK Energy Co. sold 500 billion won of bonds in September to fund production of low-sulfur fuel for ships.
• Korea South-East Power Co. is planning a possible sale of green bonds in dollars early next year.

Korea is joining in the global trend of selling sustainable debt as regulators and investors increasingly push companies toward more environmentally friendly business. Policy makers in the north-east Asian nation are also looking for ways to help smaller firms in a sluggish economy.

See also: Korea Pushes Sustainability Bonds in Effort to Boost Economy

As there's a growing interest in sustainable investing, borrowers could lower their overseas funding costs when they sell ESG debt, said June Won, managing director of capital markets origination at Citigroup Global Markets Korea Securities Ltd., the top arranger of Korean offshore bonds. Such sales will continue to increase next year, he said.

Korea's particulate pollution is twice the average for OECD member countries, and the average South Korean can expect to lose 1.4 years of life expectancy because of the air quality, according to the Air Quality Life Index's recent analysis.

To contact the reporter on this story: Kyungji Cho in Seoul at kcho54@bloomberg.net

To contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net, Beth Thomas

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