Japan’s first sovereign green bonds expected to attract healthy demand

The government is set to issue its first tranche of bonds to finance development of clean energy resources this week, with investors expecting healthy demand owing to the scarcity of yen-denominated green bonds.

The finance ministry has said it will sell 10-year climate transition bonds on Wednesday and another batch of 5-year bonds later this month. The financing is meant to help the nation cut greenhouse gases to zero by 2050 and become a carbon-neutral society.

Prices of these green bonds in the “when-issued” market, which is the market for securities yet to be issued, show the climate bonds command a premium over regular Japanese government bonds (JGBs).