Social covered bond for affordable housing in Korea

07 November 2018 ... min read

7 November 2018

ING and Korea Housing Finance Corporation (KHFC) have worked together on the first social covered bond in Asia. ING acted as a joint lead manager and joint book runner for this five-year EUR 500 million bond, and is part of a collective of four banks.

Korean neighbourhood

KHFC is a state-run enterprise responsible for improving the welfare of people and national economic development by supporting the Korean government’s housing welfare policy.

The social covered bond issuance marks a significant first for ING in Asia Pacific, as ING continues to deliver new sustainable financing solutions for our clients. The number of green loans and bonds that ING has delivered in the region is growing.

The proceeds of the social covered bond will be used to (re)finance KHFC’s mortgage loan products, aimed towards providing stable and long-term housing finance in Korea. For example, certain loans support moderate to low-income households with an affordable mortgage loan and their first home purchase.

The collaboration

“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,” said Young Chang Son, Branch Manager, ING Bank Seoul Securities.

“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.”

Part of ING’s approach to sustainability is to contribute to a self-reliant society. Trillions of dollars of sustainable investment are needed to help meet the United Nations’ sustainable development goals for 2030: better health and education, more liveable cities and no more poverty and hunger. This social covered bond is a good example how capital markets can address these global challenges.

The bond is rated AA2 by Moody’s and AA- by Fitch Ratings. This is KHFC’s initial bond denominated in euros and will enable KHFC to diversify away from the US dollar as a funding source.

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