Japan's transition bonds

In this paper, we examine how these bonds are structured, investigate how proceeds are allocated, and explore the implications of recent bond market volatility. 

We unpack Japan’s issuance activity against the backdrop of new Climate Transition Bond guidelines produced by the International Capital Market Association (ICMA). JCTBs are among the first bonds aligned with this framework. Corporate transition bonds from the power sector, as the largest issuer segment, are also increasingly aligned with ICMA.

These instruments are core to Japan’s Green Transformation (GX) strategy, which aims to mobilise JPY150trn in public-private investment over the next decade. We also review the power and utility sectors, classified as hard-to-abate sectors, to assess how they are using these instruments to finance their transition plans.

About the authors

Rose Choy

Research Director, APAC

Based in Singapore, Rose has over 20 years’ experience in capital markets, most recently as a Senior PM at Conning Asia, and her research focuses on credit research and analysis on the energy transition in the Asia-Pacific region.

Jeannette Leong

Research Associate, APAC

Based in Singapore, Jeannette focuses on credit research and analysis across the Asia-Pacific region. She brings 19 years of fixed income investing experience in emerging markets, Asian fixed income and China’s onshore bond market.