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Education

University of Tokyo's maiden bond sale sells out by factor of six

Elite school's ESG debt draws investors including Nippon Life and NEC

The University of Tokyo's Yasuda Auditorium: One of Japan's most prestigious schools has made its bond market debut. (Photo by Akira Kodaka)

TOKYO -- The University of Tokyo has become the first Japanese national university to issue its own bonds, and the offer promptly sold out to a broad range of investors.

The 20 billion yen ($189 million) issue of 40-year debt, announced Thursday, attracted 126 billion yen of investor demand. That is more than six times the size of the offer, said Daiwa Securities, a lead underwriter.

The bond has drawn attention as an ESG -- environmental, social and corporate governance -- investment. Part of the proceeds will finance the development of cutting-edge research facilities.

Investors run the gamut. They include Nippon Life Insurance, technology group NEC, air-conditioner maker Daikin Industries, Sumitomo Forestry, Nippon Paint Holdings, Japan Women's University and entertainment group Yoshimoto Kogyo Holdings.

The University of Tokyo's bond, to be issued Oct. 16, will carry an 0.823% annual coupon, or about 0.18 percentage point higher than the yield on 40-year Japanese government bonds. The spread is comparable to debt recently issued by government-backed institutions.

Rating and Investment Information granted the bonds an AA+ rating due to the University of Tokyo's solid financial base. The Japan Credit Rating Agency assigned ratings of AAA as well as Social 1, the top grade for social bonds. The debt has no government guarantee.

In June, Japan relaxed rules to allow such bond sales by national universities. The University of Tokyo is the first school to take advantage of the rule change. As government funding declines, more of its peers are likely to turn to the bond market.

"Our hope that universities can stand at the forefront of social change while working with capital markets has resonated with investors," University of Tokyo President Makoto Gonokami said. "I want other universities to follow in our footsteps."

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