Mizuho1 has concluded an AUD 400 million 5-year FRN Healthcare Social Bond issuance for Shinhan Bank. This transaction marks the first FI sector AUD Healthcare Social Bond issuance in Asia. In this transaction, Mizuho served as a Joint Bookrunner, Joint Lead Manager, and the ESG Structuring Advisor.
1 Bond underwriting was conducted by Mizuho Securities Asia Limited.
Healthcare system in Korea
The healthcare system in Korea has come on by leaps and bounds over the past decade. It has achieved the largest improvement in avoidable mortality, number of nurses and number of hospital beds among the OECD countries. Today, the avoidable mortality rate in Korea is below 150 per 100,000 people and regarded as relatively low among the OECD countries. This is largely attributable to an effective healthcare system that has succeeded in reducing preventable and treatable deaths.
However, some challenges in the healthcare system still persist, one of which is the regional disparity in healthcare resources. A case in point is the urban-rural disparity in the access to emergency medical facilities. According to Statistics Korea, Seoul led in this aspect, with none of its residents unable to be reached by car from any emergency medical facilities within 30 minutes. In contrast, rural areas such as Gangwon Province and North Gyeongsang Province lagged far behind the urban areas by the same metric, with a staggeringly high proportion of the population inaccessible at around 20%2. This underpins the urgent need to improve access to medical services in rural and remote areas of Korea.
2 Data accessed in November 2024.
Healthcare social bond to bridge the gap in society
Thematic social bonds are social bonds where the proceeds are channeled exclusively to projects promoting a specific social objective. In Asia, while thematic social bonds were initially issued mainly by development banks, there has been a gradually rising uptake of such bonds among private sector issuers who would like to demonstrate their commitment to a particular social mission such as access to education, access to healthcare services or advancing gender equality.
Recognizing the regional disparity in healthcare resources in Korea, Shinhan Bank issued the first FI sector AUD Healthcare Social Bond in Asia. The net proceeds will be used exclusively to finance/refinance eligible healthcare projects (i.e. eligible hospitals, medical foundations, medical equipment and diagnostic services) in the underserved areas in Korea, as defined in the bank's Sustainable Development Goals Financing Framework, updated in November 2024. This issuance further bolsters Shinhan Bank's commitment to promoting public health and improving access to quality medical services.
Shinhan Bank priced the Healthcare Social Bond at BBSW+97bps with a negative new issue concession compared to its USD secondary levels. The final orderbook was recorded at above AUD 2.8bn, which is the largest orderbook size Shinhan Bank has ever achieved since issuing its inaugural Kangaroo Bond in 2012, capturing orders from a total of 93 accounts globally where Australian allocation represents approximately 41%. This innovative social bond label, supported by Shinhan Bank’s robust ESG Strategy and Sustainable Finance commitment, has also attracted ESG-conscious accounts.
Mizuho's commitment to sustainability
At Mizuho, we continue to further incorporate sustainability initiatives into our business strategy. We are drawing on our expertise as a financial services group to proactively provide a wide range of solutions, including advisory and capital financing support, to clients. In addition to green, social and sustainability bond labels, we also help clients navigate various thematic bond issuance options, highlighting their commitments to particular sustainability missions.
"Congratulations to Shinhan Bank on their landmark issuance of Asia's first FI sector AUD Healthcare Social Bond. This achievement sets a precedent for other issuers to consider innovative sustainable finance instruments to address specific environmental or social issues in the future."
Anthony Cho, Executive Director, Head of DCM Korea, Mizuho Securities Asia Limited
"COVID-19 was a wake-up call to the world about the vulnerability of underserved populations and the urgency of addressing the health gap. ESG-labelled instruments like this lend themselves to channeling private capital into projects that help eliminate health disparities, which could be crucial before the next pandemic hits. Mizuho is very pleased to have supported Shinhan Bank in pioneering the issuance of this Healthcare Social Bond for such a good cause."
