Japanese shipping firm NYK Line is planning to issue the country's first transition bonds, targeting to raise around ¥20bn ($179mn) for investment in climate transition efforts, such as development of LNG- and LPG-fuelled vessels, and carbon-neutral projects like ammonia-fuelled and hydrogen fuel-cell vessels.
NYK Line said today it plans to issue a five-year transition bond and a seven-year and 10-year transition bond, worth around ¥10bn each, for a domestic public offering in July. The bond issuance is supported by Mitsubishi UFJ Morgan Stanley Securities as a structuring agent.
The company is targeting to use proceeds from the bond issuance to finance and refinance planned low-carbon investment in developing and operating LNG- and LPG-fuelled vessels and an LNG bunkering ship, as well as in technology development for improvement and optimisation of operational efficiency. Part of the proceeds will also be used to finance development of zero-emissions vessels, such as ammonia-powered and hydrogen fuel-cell ships, and offshore wind power capacity and green logistics terminals.
The framework of the bonds has been reviewed and evaluated by rating agency DNV Business Assurance Japan, and it complies with the International Capital Market Association's green bond principles and climate transition finance handbook published in 2020, as well as with domestic guidelines on climate transition finance issued in May.
The Japanese government has been enhancing support for Japanese firms' energy transition to achieve the country's 2050 decarbonisation goal. The trade ministry (Meti) is working to draft a decarbonisation roadmap for the country's large carbon-emitting industries to help them utilise transition finance tools to raise funds.
NYK Line's bond issuance has been selected as the first model case for transition finance, with Meti covering 90pc of the cost of an external review. The company last month placed an order for the construction of 12 LNG-fuelled car carriers with Japanese shipbuilders.
Japanese shipping firm K Line in March signed the country's first transition loan agreement to partially fund the construction of LNG-fuelled car carrier Century Highway Green. Engineering firm Kawasaki Heavy Industries also has a plan to issue a ¥10bn sustainability bond to finance the development of a hydrogen supply chain.
