Newly Issued Bond: Hanwha Aerospace USD Bonds; IPG : 5.37%

Hanwha Aerospace’s three-year A-rated USD bond offers attractive carry, supported by defence leadership, a sizeable backlog and adequate liquidity, despite rising debt.

iFAST Research Team
iFAST Research Team20 Jul 2026 23 Views
Newly Issued Bond: Hanwha Aerospace USD Bonds; IPG : 5.37%

  • Hanwha Aerospace (hereinafter "Hanwha Aero") plans to issue a 3-year senior unsecured USD bond, with reference initial guidance at 5.368% (3-year US Treasury yield + 115bps area). Proceeds will be used for general corporate purposes. The issuer is currently rated A- (S&P), and the bond is expected to carry the same A- (S&P) rating, placing it in investment-grade territory.
  • Hanwha Aero belongs to Korea's Hanwha Group and is the country's largest defense company, with core operations spanning land systems, aerospace engines and components, and — since 2025 — a shipbuilding business brought into its consolidated accounts. Benefiting from Europe's rearmament and Middle East demand, the company's export footprint has expanded from Poland to multiple European and Middle Eastern markets, with an order backlog of roughly KRW 38 trillion (all figures in KRW hereafter) underpinning revenue visibility for the coming years.
  • In 2025, total revenue jumped 138% YoY to KRW 26.7 trillion and operating profit rose 78% to KRW 3.09 trillion, both record highs. The revenue surge was driven mainly by the first full-year consolidation of the shipbuilding business (Hanwha Ocean), which contributed about KRW 12.8 trillion of revenue, while momentum in the core defense business was led by land systems exports. Growth momentum carried into the Q1 of 2026: 1Q26 revenue rose about 5% YoY to KRW 5.75 trillion and operating profit climbed about 21% to KRW 639 billion, helped by a higher mix of high-margin defense business, lifting the margin from 9.7% to 11.1%. Net profit surged about 188% YoY to KRW 526 billion, though this was largely a low-base effect.
  • As of 1Q26, total debt rose by KRW 3.4 trillion YoY to about KRW 15.4 trillion, the increase stemming mainly from the consolidation of Hanwha Ocean and funding for business expansion. However, with earnings and equity growing in tandem, net gearing stood at around 41% and net debt/EBITDA at about 2.6x — a reasonable debt level. On liquidity, the company holds cash reserves of about KRW 8.3 trillion, sufficient to cover roughly KRW 6.6 trillion of debt maturing within one year, leaving an adequate debt-servicing buffer.
  • This new bond carries a 3-year tenor, with reference initial guidance of around 5.37%. Given Hanwha Aero's leading position in Korea's defense market and the revenue visibility from its order backlog, we see the deal as offering some appeal, suitable for investors seeking stable returns — though note that the final pricing may not come as high as the indicative guidance.
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