Green Bond to fund EV production facilities: Sets example for Certified corporate issuance in Japanese market
Japanese electrical manufacturing conglomerate Meidensha has announced the issuance of their inaugural green bond, valued at JPY 6bn (approximately USD 55m) and set to mature in 5 years. The deal was popular with institutional investors – 22 investors showing “public investment will”.
Meidensha stands out as the first private sector Japanese Corporation to receive Climate Bonds Certification, following the ground breaking Certified issuance from public rail constructor JRTT, funding developments to the Shinkansen fast rail network. Meidensha's commitment to ESG, emissions reduction and the SDGs is quite visible.
The pricing range was from 0.25% - 0.30% for the first day of marketing. Strong demand was received from financial institutions such as asset managers, insurance companies and regional banks leading to the deal finally being priced at 0.26%, at the tighter end, with final book cover of about 4.5 times as much as the issue amount Meidensha advised.
Proceeds to EV production
Proceeds of the bond will be used for investment in the mass-production capacity for EV motors and inverters, which are a growing focus for the power and electrical equipment manufacturer, founded in 1897. EV motor and inverter development commenced in the early 1990s.
Mr. Akio Inoue*, Executive Officer of Accounting & Financial Group of Meidensha:
"The impact of our bond on the market may not be significant. However, as the first company from the private sector to obtain the CBI Certification in Japan, together with JRTT, which has first acquired the same Certification in the public sector, we would like to help Certification become more common in the Japanese SDGs & bond market."
Sean Kidney, CEO Climate Bonds Initiative:
“Japan has seen various multi-facetted green finance initiatives emerge to support market growth. This Meidensha bond is a sign of where the market will develop.”
“Green issuance is set to increase, and investors are increasingly looking for quality Certified green product. Meidensha is providing an early lead to the private sector in addressing this demand.”
Japan and the Green Bond Market
Greenfiance initiatives are increasing, November 2018 saw the launch of Green Finance Network Japan, a taskforce committed to a greater green focus on Japan’s finance and investment markets.
In March, Ministry of the Environment, Japan hosted the Japan Green Bond Symposium with the purpose of sharing information on the latest green bond trends in Japan and abroad.
Responsible Investor's (RI) Ella Millburn reported in May on wider SDG & TCFD developments and ESG trends and RI further reported in June that Tokyo had become the 25th member of UN sustainable financial centres (FC4S) network.
The Last Word
Meidensha’s new bond issuance is another step towards normalising Certification as a part of best practice in the Japanese green bond market.
In a statement to Climate Bonds their view is clear:
“Through this bond Meidensha has made a declaration of their intent to conduct business with full environmental awareness. With the Climate Bonds Certification, Meidensha aims to provide greater confidence by following a global Standard which provides the required strictness in the burgeoning green bond market.”
JRTT’s and now Meidensha’s bond issuances are only the beginning.
‘Till next time,
*Photo of Mr. Inoue provided by Japanese media outlet CAPITALEYE
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