Japan Railway Construction, Transport and Technology Agency (JRTT) sold ¥43bn (US$390m) of four-tranche zaito agency bonds off its Climate Bonds Initiative-certified funding framework, in what some market participants described as a milestone for Japan’s environment, social and governance (ESG) market.

JRTT in February became the first Japanese issuer to obtain CBI certification for its sustainability finance framework, in addition to a verification from DNV GL on the effectiveness of environmental impact mitigation.

The finance framework covers bonds as well as bank loans. JRTT signed a ¥55.3bn four-year sustainability loan in March.

The deal stands out in Japan’s growing ESG funding market. “The domestic deals we have seen only abide by ICMA standards and the Ministry of Environment’s guidelines, but this deal shows the Japanese market has come to a point where a Japanese issuer is able to meet strict CBI standards,” said a sustainable finance banker. “This sustainability deal will be validated even by discriminating investors overseas.”

The CBI hopes more Japanese issuers will follow. “I’m very optimistic that there are a lot of Japanese companies that would be able to qualify,” CBI CEO Sean Kidney said. “We hope to embark on the process to educate the Japanese corporate sector about the opportunity of green bond issuance.”

Source: Nasdaq

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