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Environment

Nidec's $900m green bond to fund its EV-motor ambitions

Japan's largest-ever such float to go toward R&D and capacity expansion

Nidec will use the proceeds from green bond offerings to fund the development of electric-vehicle motors like the one shown above. 

KYOTO, Japan -- Nidec plans to issue 100 billion yen ($916 million) in green bonds to fund the development of electric-vehicle motors in the company's first and the country's largest-ever float of environmental bonds, Nikkei has learned.

The precision motor maker will float three tranches of three-, five- and seven-year debts, with the buy-in deadline slated for late November. Details such as the coupon rates will be finalized soon. Lead underwriters will include Mitsubishi UFJ Morgan Stanley Securities, with the securities to be rated by Japan's Rating and Investment Information.

Green bonds are growing more prevalent as institutional investors place more weight on environmental, societal and governance factors in deciding where to put their money in. In addition to tapping growing investor demand, Nidec also hopes to foster an environmentally responsible corporate image.

Demand for EV motors from manufacturers in China and beyond remains brisk, with orders from fiscal 2019 through fiscal 2023 forecast to reach 4.55 million units. Nidec will put its proceeds toward building production facilities as well as research and development, aiming to create motors tailored to customers' needs while also bolstering its production capacity.

Nidec targets sales of up to 1 trillion yen in fiscal 2020 for its automotive components business, counting mergers and acquisitions -- up from about 300 billion yen in fiscal 2018.

Demand for green bonds is on the rise in Japan. According to the Ministry of the Environment, 40 such bonds with a total value of 593.3 billion yen had been issued from January to October. In April, Toyota Motor arm Toyota Finance made the country's largest green-bond offering yet, totaling 60 billion yen.

Meanwhile, Apple on Thursday sold a collective 2 billion euros ($2.21 billion) of six- and 12-year green bonds in Europe, one of the continent's largest ever such offerings. The funds were to be put toward shrinking the iPhone maker's carbon footprint and advancing the use of environmentally friendlier materials in its products.

Expectations abound among market watchers for more green-bond issues to come. On Thursday, U.S. rating agency Moody's Investors service raised its forecast for global green bond issuance for the year to $250 billion, up from its initial $200 billion outlook.

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