Japanese insurers buy ADB’s first blue bonds

Dai-chi Life Insurance Company and Meiji Yasuda Life Insurance Company have purchased the Asian Development Bank’s (ADB) debut blue bonds.

The bank sold the bonds through private placements. Dai-chi bought A$208m of 15-year paper, while Meiji Yasuda took NZ$217m of 10-year notes. Further terms were not disclosed.

Proceeds will finance ocean-related projects in Asia and the Pacific as part of ADB’s Action Plan for Healthy Oceans and Sustainable Blue Economies, which aims to foster sustainable investment in the region by investing and providing technical assistance to the tune of at least $5bn by 2024. 

Eligible projects include the conservation and restoration of ecosystems including coral reefs, mangroves and river embankments; sustainable fisheries management and aquaculture; pollution control; greening ports and shipping; and marine renewables such as offshore wind, tidal, wave and ocean thermal energy.

The bonds have a Second Party Opinion from Nordic provider Cicero. 

A spokesperson for ADB told RI that further blue bonds “will be guided by investor demand, our blue-related project pipeline, and prevailing market conditions”. 

A subset of green bonds, blue bonds have been slow to take off. 

"Blue bonds are where green bonds were 10 years ago, in terms of being at a nascent stage, but poised for take-off," said Suzanne Johnson, Senior Advisor to the UN Global Compact's Sustainable Ocean Business platform. "One of the key breakthroughs in building the green bond market were cornerstone issuances from multi-lateral development banks that provided the size and scale that large investors need," she added, referring to green bond programmes launched by the World Bank and the European Investment Bank back in 2007. "The ADB dual-tranche issue is an important building block in market fund ocean health and productivity. We would expect to ADB issuance pave the way for further issues."

Johnson added that the UN Global Compact will be launching an Ocean Industry CFO and Corporate Finance Taskforce in the Autumn.

ADB urged its member countries, which include Vietnam, India, China, the Philippines and Bangladesh, to adopt its approach and issue sovereign blue bonds for projects that will “both protect vital ocean resources and provide a much-needed economic boost.”

Last September, the Bank of China issued Asia’s first blue bonds, in a $942.5m deal. Most recently, in March, RI reported that Fiji has begun work on its first Sovereign Blue Bond.