EV battery maker LG Energy eyes $2 bn global bond sale
Jeong-Cheol Bae
Jun 25, 2024 (Gmt+09:00)
LG Energy Solutions' booth at RE+ 23, an annual clean energy trade show held in September 2023 in Anaheim, California (Courtesy of LG) LG Energy Solution Ltd., the world’s third-largest electric vehicle battery maker, is poised to raise $2 billion in global bonds by the end of this month to spur construction of its battery production facilities in the US and Canada.
The South Korean battery producer will issue bonds with three-year, five-year and 10-year maturities for global investors with underwriters including Citigroup Global Markets Inc. and Morgan Stanley & Co., according to investment banking sources on Monday.
The EV battery unit of Korea’s No. 4 conglomerate LG Group will issue a 10-year bond for the first time, which demonstrates the stability of the securities, said banking sources. Only a handful of stable financial institutions and companies, such as state-owned Korea Development Bank (KDB), Export-Import Bank of Korea (KEXIM) and Korea Gas Corp., have issued 10-year bonds.
The Korean market hasn't seen a 10-year corporate bond in recent years amid fears that bond prices will fall with interest rate hikes. Investors have sought short- or mid-term debts with maturities of three or five years.
“Investor sentiment on LG Energy bonds will be robust thanks to the battery producer’s strong profitability,” a banking source said.
The battery manufacturer will use the proceeds to build and expand its production facilities in the US and Canada. The company pours around 10 trillion won ($7.2 billion) per year into the two countries to ramp up battery manufacturing there.
LG Energy is operating and building two plants of its own and six joint factories with automakers in North America for a combined annual capacity of 319 gigawatt-hours (GWh), the largest in the region. LG Energy established three of the joint factories with General Motors.
The bond to be issued will be LG Energy’s second global bond after the one sold last September.
The company raised $1 billion at the time, comprised of five-year ones worth $600 million and three-year ones worth $400 million, after the issuance was five times oversubscribed.