Page 303 - 2019 6th AFIS & ASMMA

» Moderator | You Tay Lee information with the market participants, including the frequent issuers
Okay, that's a detailed explanation of what's going on. The ESG like KHFC. In addition, Korea Exchange announced a plan to establish
investment market in Korea is still not so much noticeable. The ESG their registration requirements and procedures to be registered as ESG
market I'd say is just in its infancy. And it is expected that institutional bond. So, it is indicated they want to play a role in development of the
investors in the Korean public sector may lead the expansion of the ESG bond market. At the same time, they are in the process to prepare
overall ESG investor market in the country, so please make some the internal regulations and guidelines regarding their bond registration,
comments on the major developments in the Korean capital market to so we hope to obtain the related information soon. As a leader in the Session I
promote the ESG-base responsible investment. social bond sector, we want to communicate closely with the Korea
Exchange on developing their internal guidelines.

» Panelist | Chae Sun Chung
It is quite slow, but we found major two developments. One relates » Moderator | You Tay Lee
to the national funds plan, and the other is the that of Korea Exchanges. Thank you for the very detailed and excellent explanation of what's
The first one; it is quite notable that the National Pension Fund going on in Korea. Meanwhile, we have two questions from the floor, to
announced their plan to vitalize the responsible investment in general. all of you. Have you seen any interest rate benefits for green bonds versus
So, considering the dominant presence of the national pension fund, regular conventional bond? Maureen, is that a question you want to
other pension funds or their asset management companies will have a answer?
very keen interest in the change of investment policies of the national
pension funds. There is high possibility that national pension fund may
request the asset management companies to establish principles and » Panelist | Maureen Schuller
policies of responsible investment. In addition, the national pension fund Yes, I can answer that from an analytical point of view, because, I
is likely to request the asset management companies to establish a clear think, to see actually a pricing differential for green versus non-green
ESG investment decision-making process. This means the other pension bonds in a secondary market, it's obviously a different thing from actually
funds will follow the direction set by the National Pension Fund. There printing a green bond with a price differential versus non-green bonds in
should be a very strong incentive to change their investment policies to a primary market. But during my presentation, I briefly showed a slide
broaden their responsible investment in general. which nicely illustrates, that particular for the older transactions, if you
look at current secondary market pricing, that they actually, in senior,
The second one is related with the Korea Exchange. The institution trade quite significantly through the non-green bonds, and there are a few
announced their plan to support the development of the ESG bond explanations for it. And I think one of the most important explanation is
market. In Korea, there is some, albeit small, ESG stock market. But also the differences in size of the bonds. Because the older green bonds
the ESG bond market in Korea is still quite a new area where we have tend to have a smaller 500 million sizes in euros, while adjacent non-
just started. Korea Exchange has decided to support the development of green bonds have 1 billion size. So, if you compare a smaller size with
the ESG bond market. So, they are planning to create a special section a broader investor base, or with more months for the bond, then that is
dedicated to social, green, and sustainability bonds for each by the end a natural explanation why these bonds, particularly older ones traded
of the first half of next year. To my understanding, they already prepared through non-green and secondary. So, there is, indeed, pricing differential
a preliminary report with internal guidelines. I think they will share that in secondary for some of the bonds, particularly the older ones.

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