Japan International Cooperation Agency issues social bonds under ICMA guidelines

JICA issues bonds for projects in middle- and lower- income countries

Japan International Cooperation Agency (JICA), the country’s development agency, has issued 35 billion yen (€306m) in social bonds, which will adhere to guidelines for social bonds launched by the International Capital Market Association (ICMA) in June.

The social bonds will be issued in two tranches: a 20 billion yen bond with a 10-year maturity and a 15 billion yen bond with a 30-year maturity. The lead managers on both bonds are Nomura Securities, Daiwa Securities and Mitubishi UFJ Morgan Stanley Securities.

They have received an A+ rating from S&P and an AA+ rating from Tokyo-based Ratings and Investment Information (R&I).

A JICA spokesman said proceeds from the social bond would be directed to projects in middle- and lower- income countries. The Japan Research Institute externally reviewed the deal’s adherence to ICMA’s Social Bond Guidance.ICMA, the Zurich-based body that unveiled the Green Bond Principles in 2014, launched the new guidelines at its annual general meeting earlier this year, citing demand from market participants who wanted more clarity on the expectations around social bonds.

In July, Dutch municipal bank BNG bank, issued an eight-year €1bn social bond adhering to ICMA’s social bond principles.

The voluntary principles outline the kind of projects eligible for financing under a social bond, and the populations they should target. These include affordable basic infrastructure and housing, access to essential services, food security, employment generation and socioeconomic advancement. Social impact bonds are not covered by the principles.