'Transition bonds' are new favorite for Japanese investors

Government backing, green label fuels demand for emerging asset class

Transition bonds are financial instruments used to pay for activities that help the issuer make the transition to net zero, according to the Climate Bonds Initiative. (Source photos by Kyodo and AP)

MITSURU OBE, Nikkei Asia chief business news correspondent

June 19, 2023 11:16 JST

TOKYO -- Japanese stocks are on a tear. But bonds are also humming for a different reason.

Investor demand was high for Japan Airlines' "transition bonds" being issued on Monday. The funds will be used to buy fuel-efficient jets, part of JAL's plan to achieve net zero emissions by 2050. Other steps include use of alternative fuels like hydrogen and biofuels.