"Issuing blue bonds is the most suitable way to finance projects that will solve the maritime issues that companies are facing", Mizuho Securities told Environmental Finance. This is what it sought to achieve last year when structuring Japan's first blue bond, the winner of the Award for innovation – use of proceeds (green bond).
The five-year JPY5 billion ($37.6 million), issued by Maruha Nichiro, one of the largest fishery, aquaculture, and food processing companies in the world, in October 2022, was the world's first publicly offered non-financial corporate blue bond.
Osamu Morishita, Mizuho's head of sustainability promotion, said the proceeds from the offering were used to finance a land-based salmon farming project which reduces the negative environmental impact of conventional offshore salmon farming.
Not only does it satisfy the issuer's financial needs, he said, but it also reduces greenhouse gas emissions, reduces the negative environmental impact on the ocean ecosystem, and meets global food demand.
Mizuho structured the bond according to the International Finance Corporation's (IFC) Guidelines for Blue Finance and ICMA’s Green Bond Principles.
Morishita said the firm was "surprised" by the high level of interest in the bond, which achieved a 1.2 times over-subscription. Since the issuance, the securities firm has also received inquiries about other blue bonds.
He told Environmental Finance it will continue to support issuances as "blue bonds are extremely important for Japan, a maritime nation". It added that it expects the need for issuing blue bonds will expand into municipalities.
In 2022, Mizuho also underwrote a total of JPY34.8 billion in municipal green bonds and acted as a structuring agent in five deals. This won them the award for Lead manager of the year, green bonds – local authority/municipality.
Over the past year, it has supported multiple local authority issuances including Sendai City, Hyogo Prefecture, Osaka Prefecture, Shizuoka Prefecture, and Aichi Prefecture. Use of proceeds included decarbonisation, biodiversity, forest management, fish reef, and preserving the riverine environment.
Morishita said there are many issues, such as women's empowerment or human rights, that can be solved through bonds and various financing schemes that set clear ESG targets. He said bonds are a "very useful and optimal instrument for building sustainability momentum across a municipality because they involve a variety of stakeholders during the issuance process".
He said the securities firm was proud to be able to help issuers "address their challenges and create positive environmental and/or social impact, with an eye not only on financing but also an issuers balance sheet".
He added it will "continue to lead the sustainable finance market to contribute to generating positive environmental, social, and economic impact".
Issuer: Maruha Nichiro
Size: JPY5 billion ($37.6 million)
Maturity date: 2 November 2027
Use of proceeds: Environmentally sustainable fisheries and aquaculture operations
External reviewer: Rating and Investment Information (R&I)
Lead managers: Mizuho Securities, Mitsubishi UFJ Morgan Stanley Securities
Structuring agent: Mizuho Securities
Credit rating: BBB+