Prefectures and Cities in Japan Get Ready to Issue Green Bonds

Forty-two prefectures and major cities in Japan are preparing to jointly issue “green bonds” to raise funds for environment-related projects.

According to a Yomiuri Shimbun report, green bonds worth about ¥100 billion are expected to be issued via a newly established framework set up by the Internal Affairs and Communications Ministry for the joint issuance of green bonds.

Prefectures and central government ordinance-designated cities are eligible to issue bonds under the revised framework.

Until now it has been difficult for local governments with small budgets to issue green bonds above a certain value on their own. Under the new framework, local governments will be able to offer green bonds worth a minimum of ¥100 million.

The local governments expected to participate include 28 prefectures, including Miyagi, Kyoto and Shimane, and 14 cities including Fukuoka, Kawasaki and Niigata. They will likely issue two rounds of 10-year green bonds in the latter half of this fiscal year.

Under the new framework, many local governments that need relatively small amounts of funds will be able to issue bonds worth around ¥1 billion to ¥3 billion.

For the local governments, green bonds have the advantage of being less influenced by global interest rate hikes, compared to standard bonds and the joint issuance means the implementation costs will be shared among the participating local governments.

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