TOKYO — Some 20 billion yen ($199 million) in social impact bonds will be issued by the government-affiliated Japan International Cooperation Agency as early as September, a move that could give momentum in the country to socially conscious investment.
So-called ESG investing — a strategy focusing on environmental, social and corporate governance issues — has taken off in the U.S. and Europe. ESG investment worldwide is said to be in the tens of trillions of dollars.
The International Capital Market Association, an industry group comprising major global financial institutions, set out guidelines for social bonds in June, and the JICA bonds will be the first in Japan to adhere to the rules.
JICA is close to obtaining certification from a third-party think tank that its upcoming offering meets these conditions. The money raised will be used to help fund projects in developing countries, such as ones in Myanmar’s Thilawa Special Economic Zone and geothermal power facilities in Kenya.
The yen-denominated offering will consist of two 10 billion yen tranches with maturities of 10 years and 20 to 30 years. Nomura Securities, Daiwa Securities and Mitsubishi UFJ Morgan Stanley Securities will be among the lead managers. The bonds will be sold to insurers and other domestic institutional investors.
ESG investing is catching on in Japan, with the massive Government Pension Investment Fund among those adopting the strategy. Investors are expected to favor bonds with the sort of seal of approval sought by JICA, likely encouraging capital to flow into infrastructure construction and similar projects.