Shinhan Bank Issues €600 Million Green Covered Bond

[Financial News] Shinhan Bank successfully issued a €600 million green covered bond, backed by strong demand from European investors. The issue was €100 million larger than the initial target.
According to Shinhan Bank on the 8th, the green covered bond has a maturity of 3.5 years and an issue size of €600 million, equivalent to approximately 944.4 billion won.
A covered bond is a debt security issued against high-quality assets held by the issuer. Investors have priority claims on the collateral and dual recourse against the issuer. The bond received credit ratings of 'Aaa' from Moody's Corporation and 'AAA' from Fitch, with a coupon rate of 3.4116% per year.
The final issue spread was set at 19 basis points over the mid-swap rate (MS), the benchmark used to price euro-denominated bonds. The mid-swap rate is a swap rate used to convert a floating rate into a fixed rate and serves as a benchmark rate for euro-denominated bonds.
Before the issuance, Shinhan Bank held local roadshows in major European cities, including London, Munich, Luxembourg and Copenhagen. The bank explained its financial condition, covered bond program and ESG strategy to major investors.
The bookbuilding process following the roadshows attracted total orders of €1.9 billion, approximately 3.8 times the initial target of €500 million. Reflecting this demand, Shinhan Bank finalized the issue size at €600 million.
During the pricing process, the spread was lowered by 7 basis points from the initial price guidance, resulting in a final issue spread of MS+19 basis points.
By region, the allocation was 50% to pan-European investors, 37% to the United Kingdom and 13% to Asia and other regions. By investor type, asset managers received 43%, banks 28%, central banks and public institutions 18%, and other investors 11%.
A Shinhan Bank official said, "Amid continued market volatility and uncertainty, we communicated directly with investors through local roadshows in Europe and confirmed their strong interest in Shinhan Bank. With this green covered bond issuance as a starting point, we will strengthen our position as a regular issuer in the euro covered bond market and continue issuing ESG-linked bonds to expand our global investor base."

[email protected] Seo Ji-yoon Reporter