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Japan’s Nippon Life invests in Kyushu Electric’s 55 billion yen transition bond

Nippon
By Hui Ching-hoo   
May 24, 2022

Japan’s Nippon Life Insurance is among the investors in a 55 billion yen (US$392 million) carbon neutral bond offering by Kyushu Electric Power, marking the insurer’s first investment in the transition bonds of a local company.

Transition bonds are a type of green debt that companies issue to help in their transition out of carbon-intensive operations.

Kyushu Electric plans to use the bond proceeds for the development of liquefied natural gas thermal power plants, and to cover the costs of suspending or closing existing thermal power plants.

Nippon Life bought 2.6 billion yen of the bonds to help the insurer achieve its decarbonised finance framework target to reduce its greenhouse gas emissions by at least 45% by 2030 from the 2010 level.

“Nippon Life is strengthening its environmental, social and governance investment and finance, given its mission and the public nature of the life insurance business and from the standpoint that it has always worked to coexist with environment, communities and society,” the insurer says in a statement on May 21.

A separate statement from Kyushu Electric on May 18 says a group of institutional investors, including Nippon Life, subscribed to its five- and ten-year bond offering. It did not disclose the names of the other investors.

The coupon rate is 0.35% for the five-year bonds and 0.64% for the ten-year bonds. Nippon Life did not specify which term it bought.

Transition bond are still new in the green bond space. According to Climate Bonds Initiative, the global transition bond market grew more than 33% year-on-year to around $9.6 billion in 2021, accounting for 0.3% of overall climate bond assets.

Tokyo-based Nippon Life had 749.9 trillion yen of total assets as of December 2021.