Nippon Yusen Kaisha (NYK) is preparing to issue its fifth transition bond as it seeks to scale investment in alternative fuels and greenhouse gas reduction technologies across its fleet. The Japanese carrier plans to raise about JP¥ 20 billion through a five year unsecured corporate bond scheduled for issuance in late November.
Transition bonds, which finance projects that support a shift to a low carbon economy, have gained traction in shipping as operators seek capital for multidecade decarbonisation pathways. NYK has been an early adopter, having issued the sector’s first green bond in 2018 followed by Japan’s first transition bond in 2021.
Proceeds from the latest issuance will be directed to projects set out in the company’s medium term management plan, Sail Green, Drive Transformations 2026, A Passion for Planetary Wellbeing. NYK said the funds will support long term strategies that contribute to decarbonisation, including expanding its fleet of LNG fuelled vessels. The projects will follow the company’s Vessel fuel conversion scenario towards 2050.
According to NYK, the plan aims to maximise total greenhouse gas reductions by gradually shifting to the optimal fuel for each vessel type. The company intends to increase its LNG fuelled fleet by 2030 while adopting advanced GHG reduction technologies. In the longer term, it aims to transition to ammonia fuel where technically and commercially viable.
The bond framework has been assessed by DNV Business Assurance Japan, which provided a second party opinion. Mitsubishi UFJ Morgan Stanley Securities is acting as structuring agent.
The issuance adds to a widening pool of sustainability linked finance in the maritime sector. It also reflects growing investor appetite for instruments that support incremental decarbonisation in hard to abate industries. For NYK, it offers a route to raise capital for transitional fuels now while keeping optionality for future shifts to zero carbon alternatives.
