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2 Japanese Megabanks Issue 'Green Bond'

2017/10/20 18:31
Sousuke Kudou, technical writer
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The investments of Green Bond in 2016 (source: "Green Bond Guidelines 2017" of Japan's Ministry of the Environment)

Mizuho Financial Group Inc (MHFG) and Sumitomo Mitsui Financial Group Inc (SMFG) respectively announced the issuance of "Green Bond" (denominated in euros) Oct 11, 2017.

Both of the two companies' bonds conform to "Green Bond Principles 2017" of International Capital Market Association (ICMA) and "Green Bond Guidelines 2017" of Japan's Ministry of the Environment.

Green Bond is a bond that invests only in environmentally-conscious businesses such as renewable energy business. As "responsible investment," which focuses on companies' ESG (environment, society and governance)-related efforts, is globally spreading, Green Bond plays a role of responding to the needs of investors who are concerned about environmental issues.

This is the first time that MHFG has issued a green bond. It will lend the raised capital to Mizuho Bank Ltd, a subsidiary of MHFG. And Mizuho Bank will invest the capital in green projects. The total value of issues is 500 million euro. The bond was issued Oct 16, 2017 (conditions will be decided Oct 10, 2017). The term and interest rate are seven years and 0.956%, respectively.

On the other hand, this is the second time that SMFG has issued a green bond, following the US dollar-denominated green bond that was issued by Sumitomo Mitsui Banking Corp in October 2015. The total value of issues is 500 million euro. The bond was issued Oct 11, 2017. The term and interest rate are seven years and 0.934%, respectively.