GS Group Kicks Off Investment in 'KRW 15 Trillion AI Data Center' ... Returns to Corporate Bond Market After Five Years [fn Market Watch]

[Financial News] GS Group is returning to the public corporate bond market after about five years. With KRW 80 billion in corporate bonds maturing next month and a KRW 15 trillion Donghae AI data center project planned, the move is seen as an effort to reopen funding channels ahead of full-scale investment in new businesses.
According to investment banking industry sources on the 18th, GS Group is preparing a demand forecast for a corporate bond issue worth KRW 100 billion in total.
The issue will comprise KRW 50 billion each in two-year and three-year bonds. Depending on demand forecast results, the issue may be increased to as much as KRW 150 billion. The target yield band is 30 basis points below to 30 basis points above the individual issue's fair-market yield. The bonds are scheduled to be issued on the 21st of next month.
This will be GS Group's first public corporate bond issue in about five years, since late October 2021. The amount of corporate bonds maturing this year is KRW 80 billion on the 29th of next month. While the new issue is primarily intended to refinance maturing debt, it is also drawing attention because it coincides with GS Group's move to ramp up large-scale AI infrastructure investment.
GS Group plans to invest approximately KRW 15 trillion in the 1.2-gigawatt Phase 1 Donghae AI data center project. GSAI Infrastructure, the project company, plans to finance about 20% of the investment with equity and the remainder through project financing and other methods.
Assuming that GS Group secures a 50% to 51% stake in GSAI Infrastructure and the equity ratio remains at 20%, a simple calculation suggests that GS Group's share of the capital investment could reach approximately KRW 1.5 trillion. However, the actual equity ratio and GS Group's final contribution may vary depending on the project structure and financing conditions.
With large-scale investment in a new business ahead, the need to secure diverse funding channels, including corporate bonds, has grown even though GS Group currently has ample financial capacity.
GS Group has relatively strong financial capacity. According to NICE Credit Rating, its standalone total borrowings stood at KRW 150.9 billion at the end of March this year, while cash and cash equivalents amounted to KRW 371.4 billion, resulting in net debt of negative KRW 220.5 billion. Its debt-to-equity ratio was also low at 9.2%.
Ji Hyeong-sam, a senior researcher at NICE Credit Rating, assessed, "GS Group is expected to stably meet funding needs for recurring expenses and equity investments related to new businesses, supported by stable dividend income from its core subsidiaries." Ji added, "Considering its high credit standing as the holding company of GS Group, its investment stakes in subsidiaries and affiliates, and the value of GS Tower, its financial flexibility is also at a very strong level."

[email protected] Kim Hyun-jung Reporter