Two factors may be driving this demand. First, the 5-year JGB yield has approached almost 2% for the first time since before 2000, potentially shifting investor preference towards shorter-duration buckets where JCTBs sit. Second, JCTBs are eligible collateral under the Bank of Japan's climate-response financing facility, entitling holders to 0% funding — a policy-linked incentive that makes these bonds increasingly attractive for banks.
Where thematic bonds price tighter than vanilla equivalents, this signals genuine investor demand and supports the case for ongoing transition-labelled issuance.
