Sustainability financing to support the sale of zero-emission electric vehicles and lower income people
Hyundai Card combined its securitisation experience and ESG ambition in a pioneering offering of sustainability asset-backed securities (ABS), aligning with both social and environmental objectives.
The transition to a sustainable future will require the support of every part of the financial sector. Hyundai Card, the credit card affiliate of Korea’s Hyundai Motor Group, recently completed its first Sustainability securitisation, demonstrating the benefits of integrating ESG in structured financing.
The ESG approach to ABS
Hyundai Card’s KRW 350 billion (EUR 259 million) Sustainability ABS is a pioneering approach to securitisation. Proceeds from this Sustainability ABS will be used solely to provide financing to support the sale of zero-emission electric vehicles and to support lower-to-moderate income card members of Hyundai Card by providing access to financial services. To maintain transparency, Hyundai will report on the use of the proceeds in an annual sustainability report for the investor.
“This issuance aligns Hyundai Card’s ABS programme with the company’s sustainability strategy, which strives to create better outcomes for both society and the environment by aligning its activities with the UN Sustainable Development Goals,” said the officer in charge of international finance and the transaction at Hyundai Card.
Hyundai Card is a key part of the Hyundai Motor Group, which sells over 6 million vehicles globally in 2021 and is investing heavily in zero-emission mobility. As Korea’s largest automaker, adopting sustainable practices across the entire value chain has the potential to make a profound impact.
As the first of its kind, this ABS issuance combined both green and social criteria and was structured as a Sustainability ABS pursuant to Hyundai Card’s newly established Sustainability Financing Framework (the “Framework”), with the support of Societe Generale.
Hyundai Card’s inaugural Framework covers a wide range of sustainability financing solutions such as sustainability bonds, loans and asset-backed securities, for which proceeds are expected to contribute to the transition to a low-carbon economy and advance the socio-economic development of South Korea.
“The innovative structure of this Sustainability ABS brought together Societe Generale’s capabilities in both securitisation and sustainable finance to deliver a product that is fully aligned with Hyundai Card’s ESG objectives,” said Florence Coeroli, Head of Asset-Backed Products for Asia Pacific at Societe Generale. “This will pave the way for future Korean ABS transactions that support the transition to a more sustainable future.”
An independent opinion provided by Sustainalytics, a leading ESG research, ratings and data firm, confirmed the alignment of the Framework with the Sustainability Bond Guidelines 2021, Green Bond Principles 2021, Social Bond Principles 2021, Green Loan Principles 2021, and Social Loan Principles 2021.
“We were delighted to support Hyundai Card in developing a robust Sustainability Financing Framework aligning with the best market practices, allowing the issuance of impactful sustainability financing that contributes to South Korea’s transition to a low carbon economy while advancing the UN Sustainable Development Goals,” said Yasmine Djeddai, Head of Sustainable Finance for Asia Pacific, Societe Generale.
Commitment to a sustainable future
Societe Generale was Sole Lender and Sole Sustainability Coordinator on the transaction, which was also the bank’s first Sustainability ABS globally.
This deal also builds on Societe Generale’s track record in structured finance in Korea, where it has arranged more than 10 securitisations including a ground-breaking Social ABS for Shinhan Card1 as well as Lotte Card in 2021.
“Hyundai Card shares our commitment to ESG and our view of financing as a catalyst in the transition to a more sustainable future,” said Coeroli. “We are proud to be supporting a key client in facilitating EV purchases and advancing financial inclusion in an important market for Societe Generale in Asia Pacific,” said Eugene Kim, Head of Asset-Backed Products for Asia at Societe Generale.