KT&G issues 300 billion won in corporate bonds for the first time, buys land in Asia to expand globa

  For the first time since its establishment, KT&G has issued corporate bonds and plans to use the funds raised to purchase factory land in Kazakhstan and Indonesia.

News flash: According to Korean media outlet fetv, KT&G has issued corporate bonds for the first time since its founding and plans to use the proceeds to buy land for factories in Kazakhstan and Indonesia.

For a long time, KT&G maintained a debt-free management style. However, cash flow has declined as it expands overseas investment and implements shareholder return policies. KT&G issued unsecured senior corporate bonds worth a total of 300 billion won, including 100 billion won in two-year bonds and 200 billion won in three-year bonds, with annual interest rates of 4.18% and 4.322%, respectively. 

Expanding global production bases 

KT&G aims to issue corporate bonds to meet mid- to long-term needs and secure global production bases to enhance manufacturing capacity. On January 26 this year, KT&G announced its mid- to long-term growth strategy. As part of this strategy, it plans to invest 3.9 trillion won in capital expenditure (CAPEX) by 2027. 

Of this investment, 3 trillion won will be allocated to three core businesses: NGP (next-generation tobacco products), the global tobacco business, and the health functional food business. The remaining 900 billion won will be used for maintenance. 

The 300 billion won raised this time will be used to purchase land, production equipment, and other related tangible assets for new factories in Kazakhstan and Indonesia. 

It will also be used for infrastructure and safety equipment construction. The new factory in Kazakhstan will be an integrated facility for producing tobacco and NGP products. It is expected to be completed next year and will cover approximately 200,000 square meters. The new factory in Indonesia will be used to produce tobacco and is expected to be built between 2023 and 2025, covering approximately 190,000 square meters. 

Holding a leading position in the tobacco market 

Previously, on August 23, KT&G received an 'AAA/Stable' rating from three credit rating agencies: Korea Investors Service, NICE Investors Service, and Korea Ratings. 

KT&G holds a dominant position in South Korea’s tobacco and red ginseng markets, with a 65% share of the cigarette market and a 75% share of the red ginseng market. Before privatization, it also long held a monopoly over the manufacturing and sale of cigarettes and red ginseng in South Korea.