Transforming lives in South Korea: Social bonds insights from KHFC
To mark the listing of Korea Housing Finance Corporation (KHFC)'s first social bond on the Luxembourg Stock Exchange (LuxSE) and its display on the Luxembourg Green Exchange (LGX), we sat down with its Executive Director Han Youn Sik to hear more about KHFC's pioneering work in the space of social bonds and the positive impacts these bonds are having on the people of South Korea.
The proceeds from this bond will be used to provide affordable, long-term, fixed-rate amortised mortgage loans, helping households manage their mortgage payment burden through stable debt payments. By offering public mortgages such as the Bogeumjari Loan, KHFC enables low- and moderate-income families, newlyweds, multi-child families, single-parent households, and households with disabled members to secure their home with a low interest rate.
This focus directly addresses the social needs of vulnerable populations, aligning with our overarching goal of promoting financial inclusion and social welfare in Korea.
KHFC’s social bond issuances not only address housing inequality but also support the development of sustainable communities by reducing the burden of household debt. In doing so, we create a more resilient housing market, which is critical to our sustainability mission. This bond strengthens our commitment to addressing societal challenges while ensuring economic stability, reinforcing our role as a leader in sustainable finance.
Furthermore, the COVID-19 pandemic accelerated interest in social bonds as governments and institutions looked for ways to address the economic and social fallout.
Social bond issuances align perfectly with this mandate, as they enable us to secure the necessary funding to drive our social objectives forward. These bonds allow us to tap into capital markets while promoting a strong focus on social good, reinforcing our role as a key player in sustainable development.
By prioritising social bonds, KHFC is able to contribute meaningfully to Korea’s social welfare system and achieve financial sustainability in a responsible and impactful manner.
While there has been significant progress in defining social bond frameworks, there is still a need for more standardized impact reporting and greater alignment across international markets. Additionally, investor appetite for social bonds continues to grow, but there is often a lack of awareness or understanding regarding the specific social outcomes that these bonds target.
Bridging the gap between financial objectives and social impact remains a key challenge for issuers in this space.
In the near future, we expect to see greater innovation in terms of the types of projects funded through social bonds, such as more focus on social inequalities. KHFC plans to remain at the forefront of this evolution by continuing to issue bonds that address Korea’s affordable housing needs and by actively participating in discussions around the development of social bond standards.
Our goal is to inspire other issuers to follow suit, contributing to a broader global movement toward sustainable and socially responsible finance.
Find out more by consulting the bond's security card.
Could you please tell us about this bond and how it aligns with KHFC’s overall sustainability strategy?
This EUR-denominated social covered bond is a vital component of KHFC's Sustainability Strategy, specifically aligned with our mission to enhance housing accessibility for underserved populations.The proceeds from this bond will be used to provide affordable, long-term, fixed-rate amortised mortgage loans, helping households manage their mortgage payment burden through stable debt payments. By offering public mortgages such as the Bogeumjari Loan, KHFC enables low- and moderate-income families, newlyweds, multi-child families, single-parent households, and households with disabled members to secure their home with a low interest rate.
This focus directly addresses the social needs of vulnerable populations, aligning with our overarching goal of promoting financial inclusion and social welfare in Korea.
KHFC’s social bond issuances not only address housing inequality but also support the development of sustainable communities by reducing the burden of household debt. In doing so, we create a more resilient housing market, which is critical to our sustainability mission. This bond strengthens our commitment to addressing societal challenges while ensuring economic stability, reinforcing our role as a leader in sustainable finance.
Why did KHFC choose LuxSE to list this social bond?
LuxSE has long been recognised as the global leader in sustainable finance, known for its rigorous transparency standards and its commitment to supporting ESG-focused issuances. By listing this bond on LuxSE and displaying it on LGX, KHFC aims to leverage this premier platform, gaining visibility among a diverse range of international investors who are actively seeking high-quality, socially responsible investments.In 2018, KHFC made history by issuing Asia’s first covered social bond. What have you noticed the most about the development of the market since then?
Since 2018, the market for social bonds has grown exponentially, both in Asia and globally. One of the most significant developments we’ve noticed is the growing awareness among investors of the importance of social impact, particularly in response to global challenges like the housing crisis and income inequality.Furthermore, the COVID-19 pandemic accelerated interest in social bonds as governments and institutions looked for ways to address the economic and social fallout.
KHFC places its focus on social bond issuances. Could you tell us more about why this is such a strategic priority for your company?
KHFC’s core mission is to enhance the quality of life for vulnerable populations by improving access to affordable housing finance.Social bond issuances align perfectly with this mandate, as they enable us to secure the necessary funding to drive our social objectives forward. These bonds allow us to tap into capital markets while promoting a strong focus on social good, reinforcing our role as a key player in sustainable development.
By prioritising social bonds, KHFC is able to contribute meaningfully to Korea’s social welfare system and achieve financial sustainability in a responsible and impactful manner.
What do you see as the main challenges faced in the social bond market at the moment?
One of the main challenges in the social bond market is ensuring that the impact of these bonds is both measurable and transparent.While there has been significant progress in defining social bond frameworks, there is still a need for more standardized impact reporting and greater alignment across international markets. Additionally, investor appetite for social bonds continues to grow, but there is often a lack of awareness or understanding regarding the specific social outcomes that these bonds target.
Bridging the gap between financial objectives and social impact remains a key challenge for issuers in this space.
How do you see the market evolving and how does KHFC plan to contribute to this evolution?
We believe the social bond market will continue to evolve with more robust frameworks, clearer reporting standards, and increasing investor demand for transparency.In the near future, we expect to see greater innovation in terms of the types of projects funded through social bonds, such as more focus on social inequalities. KHFC plans to remain at the forefront of this evolution by continuing to issue bonds that address Korea’s affordable housing needs and by actively participating in discussions around the development of social bond standards.
Our goal is to inspire other issuers to follow suit, contributing to a broader global movement toward sustainable and socially responsible finance.
Find out more by consulting the bond's security card.
