Sustainability-linked bond issuance in Japan for 2026 will be in line with last year's $10 billion total due to diversification efforts amid energy supply disruption due to the Middle East conflict, Nikkei Asia reported Thursday, citing SMBC Nikko Securities.
Meanwhile, Mizuho Securities forecasts a 10% increase in issuance for the fiscal year, with the market maintaining its appetite despite a decline in megadeals, the report cited senior sustainability strategist Yasunobu Katsuki as saying.
The Japanese government views the Middle East war as supportive of an energy transition set forth by former Prime Minister Yoshishide Suga, intending to make the country carbon-neutral by 2050, the report said.
The strategy involves energy sources that include nuclear, hydrogen, and ammonia, on top of renewables, supporting the country's supply which is still reliant on imports, according to the report.
The efforts face bottlenecks in terms of the development of alternative energy technologies, commercial scaling, and minimal disruption to the economy and workforce, the report said.
Sovereign climate transition bond issuances in the country have seen a decline since their launch in fiscal 2023, although there is a plan to issue such bonds amounting to 1 trillion yen in fiscal 2026, the report cited research firm Climate Integrate as saying.
(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)