About Social Bond Social bonds are special purpose bonds issued to finance the projects for realization of social value. The use of the fund is limited to the projects related to social values, such as housing welfare and education. The International Capital Markets Association (ICMA) has suggested the Social Bond Principles since 2016 to enhance transparency of the social bond market, and recommends evaluation of the market to be conducted by independent rating agencies. ※ ICMA suggests four criteria for recognition of social bonds: Use of Proceeds; Process for Project Evaluation and Selection; Management of Proceeds; and Reporting. Building Social Financing Framework In response to the growing international interest in socially responsible investment, HF established the covered bond framework in September 2018, and issued the first Euro Social Covered Bond in Asia. HF has also established a social financing framework in order to lay the foundation for socially responsible investment in the domestic bond market, and has been issuing all MBS and covered bonds in the form of social bonds since March 2019. HF’s social financing framework has been recognized by Sustainalytics, an international certification body that its policy mortgage supply and securitization project are contributing to realization of the social value of promoting housing welfare for low-to-middle class and improving stability of the housing finance market. Effect of Issuance of Social Bonds - Increased stability of issuance according to expansion of investor base strengthens the stable supply base of policy mortgages - Increasing awareness of HF as the organization that leads realization of social value, and maximizing the marketing effect in the domestic/overseas markets - Playing the leading role of activation of ESG bonds, and contributing to establishing the foundation for domestic socially responsible investment.