The Korea Development Bank (KDB) announced on July 13 that the bank will invest about $130 million in the Haikou International Airport Expansion Project in Hainan Province, China, one of the county’s “One Belt, One Road” Projects.
The project is a large-scale $2.8 billion national development plan supported by the Chinese central government and the Hainan provincial government. The KDB invests in this project by creating a private equity fund (PEF) in Korea.
Hainan Province is a representative tourism and logistics hub in the southernmost part of China and the core of the “One Belt, One Road” Project. Haikou International Airport is the largest airport in Hainan Province, used by 20 million people a year. The airport has a stable business structure, which runs the only non-international duty free shop in China.
In addition, the KDB plays an active role in Korean enterprises’ participation in infrastructure projects through the Asian Infrastructure Investment Bank (AIIB) led by China. The company is brokering project financing (PF) for the Georgian Nensrka Hydropower Power Plant project, the first AIIB cooperative financing project for the first time as a Korean financial institution.
The project will build a hydroelectric power plant with a capacity of 280 MW in the Nanskra River in the northwestern part of Georgia and sell the generated power to a state-run power company for 36 years. The project will cost a total of $1 billion.
KDB issued and priced $300 million in floating-rate senior unsecured green bonds due 2022. This was KDB’s inaugural green bond offering and the issue was priced early in the New York trading day and received demand from accounts across Asia, Europe and the United States. Bank of America Merrill Lynch, Credit Agricole CIB and HSBC acted as the joint bookrunners in the offering.
The Green Bonds pay a quarterly floating rate coupon of 3-month USD LIBOR plus 0.725% per annum to a maturity date of 6 July 2022. The final order size was over $650 million across 50 accounts (close to 2.2 times over-subscription). Asia was allocated 46%, European accounts purchased 18% while U.S.-based accounts purchased the remaining 36%. By investor-type, bank treasury took 32% of the issuance, fund managers 26%, central bank/sovereign wealth fund/agency 23%, pension 14%, private banks and others 5%.
KDB is a South Korean government-owned financial institution pursuant to The Korea Development Bank Act, as amended and it has been the leading bank in the nation with respect to supplying of industrial capital to assist the nation’s economic growth and development.
The Green Bonds have been registered with the Securities and Exchange Commission and offered to investors in the United States under Schedule B of the Securities Act of 1933, as amended and offered to investors outside of the United States in compliance with Regulation S under the Securities Act.
The Green Bonds are rated Aa2 by Moody’s, AA by Standard & Poor’s and AA- by Fitch and will be listed on the Singapore Exchange.
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A map showing the One Belt, One Road Project connecting Asia and Europe being pushed by China.(Photos: KDB)
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