Maruha Nichiro, a major seafood company, will sell Japan's first "blue bond" next month to fund sustainable fisheries.

According to a filing, the firm tapped Mizuho Securities and Mitsubishi UFJ Morgan Stanley Securities to manage the $5 billion ($35 million) offering of five-year notes. It is the company's first bond, and the proceeds will go toward projects such as salmon farming.

Globally, just a handful of issuers have offered blue bonds totalling approximately $2 billion. This is a small portion of the $1.5 trillion in green debt. Despite this, the market is emerging as investors and analysts are increasingly scrutinising the usage of funds acquired from such debt to ensure that borrowers are not misrepresenting their sustainable credentials to capitalise on a feverish demand.

The World Bank defines blue bonds as debt instruments to raise capital “finance marine and ocean-based projects that have positive environmental, economic, and climate benefits.”

Despite a broad market selloff, the decline in blue bonds, which are relatively scarce, has been less severe than the overall decline in green debt. According to Bloomberg data, the average loss on seven blue bonds outstanding globally is 11.2%. This is compared to a global index of green notes of 28%.

The vast majority of bond sales have been by sovereigns and international organisations, making corporate issuance even rarer. Maruha Nichiro, situated in Tokyo, also imports salmon, crab, and other fisheries products to meet Japan's massive demand for seafood.

The International Finance Corporation and other global organisations plan to release a guidance document this fall that will help define eligibility criteria and key performance benchmarks for fundraising in the so-called blue economy. For the time being, the issuance is governed by the green bond principles, which are a set of voluntary standards on structure, transparency, and reporting.

Source: The Japan Times

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