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Japan's Hulic to issue unique environment-related corporate bonds

If issuer does not meet environmental goals, yields will rise

Hulic's new corporate bonds will be the first of their kind in line with the environmental, social and corporate governance funding framework. (Photo by Tokuyuki Matsubuchi)

TOKYO -- Major Japanese property company Hulic plans to issue unique corporate bonds as early as October in accordance with the international framework for funding related to environmental, social and corporate governance. 

The yields on the new corporate bonds will rise if environment-related goals are not met. The new corporate bonds will be the first of their kind in line with the ESG funding framework. 

While investors provide funds to companies attaching importance to the environment, companies will proceed with environmental measures to avoid an increased interest rate burden.

In particular, Hulic has set a target of developing electricity generation facilities of its own. The goal is to have its headquarters and group companies powered entirely by renewable sources.

Hulic has also set a target of completing a 12-story wooden commercial facility, the first of its kind in Japan.

If either of the two targets is not met by 2025, the yield on corporate bonds will rise by 0.1%.

The term of the bond will be 10 years and the company plans to raise around 10 billion yen ($94.4 million). Bond yields and other terms will be determined according to investors' demand, but if more investors who focus on ESG factors apply, the bond's terms could be better than those of ordinary bonds.

Mizuho Securities will be a lead manager, but other major securities companies are expected to be involved in bond flotation, as the issuance of this kind of bonds is likely to continue in the future.

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