Page 300 - 2019 6th AFIS & ASMMA

value of your house, so normally you buy the house and you keep the
house for at least 10 years. In UK, the transaction costs are very little, so
a property can move into the market much quicker than in Belgium. So,
we have these different situations, and we try to ask cities, regions, and
countries to help borrowers to have a green package.
For example, if you want to renew the house, the bank can help
you with some extra money. But the real money should come from
incentives, for example, for energy, for solar panels, for making some
works for putting the heat pumping in the house, or doing the isolation.
So if you sum together the money coming from the city government of
Brussels and the money coming from my bank, it's really creating an
advantage for the borrower to move up the energy efficiency. So that's the
idea behind our story.
» Moderator | You Tay Lee
Okay now to Chae Sun Chung. I understand the Korea Housing
Finance Corporation issues mortgage-backed securities and covered
bonds in the form of social bonds, so please, introduce KFHC's activities
as the issuer of social bonds in both Korean and overseas bond markets.
» Panelist | Chae Sun Chung
Executive Director, Korea Housing Finance Corporation
Okay, considering the speakers and panelists in our session, my role
seems to be making some comments on the general evolution of ESG
investment in Korean market. First, let me update you on the activities of
the Korea Housing Finance Corporation. As the issuer of social bonds,
we started to issue the covered bonds in overseas market from 2010, and
we issued euro-denominated social covered bonds just last year. And our
corporation started to issue Korean won-denominated social MBS in
the domestic market from just March this year. Having recognized the
purchase of the underlying long-term fixed-rate mortgages to securitize,
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or to be used as the collateral for the issuance of MBS or a covered
bond, we found that the purchased transaction complies with all the
requirements of the social bond principles set forth by ICMA. So, we
started to establish a social financing framework, and started to issue the
covered bonds.
In case of the issuance of social covered bonds, the main driver Session I
is broadening the investor base. Just as I mentioned, in last year, we
completed quite successfully the issuance of social covered bonds that
was denominated by the euro currency. This was the first issuance of
social covered bonds by an Asian issuer, and also the first euro covered
bond by Korean issuer. In June this year, we completed a second issuance
of social covered bonds. It was quite successful, and the currency was
also the euro. And we got credit rating from S&Ps, and we filed the
ECBC covered bond label. In particular, I want to note that on the
second issuance, our corporation was recognized as a qualifying issuer
by the Singaporean government authority, and received financial benefits
provided by the Asian Bond Grant Scheme.
In the domestic bond market, our business strategy was to become
the market leader in the initial formation of ESG bond market, which
was also the key driver. It's a little bit different from the issuance of
the covered bond. In the domestic market, we already have an enough
investor base. So, the purpose of the issuance of social MBS is not to
broaden our investor base. I just mentioned the main key driver is to
be the key market leader in the evolution of ESG bond market. The
issuance of green bonds by Korea Development Bank last year was the
first issuance of the ESG bonds in Korea. Up to July this year, the total
issuance of ESG bonds in the domestic bond market amounted to slightly
over nine trillion won. The issuance of KHFC social MBS accounted
for over 70 percent of the total issuance, including the green bonds or
sustainability bonds. I would say ESG bond market has just started, and
the KHFC is a market leader in the social bond sector.
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