TOKYO -- Transition bonds have been a niche financing tool for helping heavy industries transition to net-zero. This market will soon get a big boost from the Japanese government, which is preparing to issue the world's first sovereign transition bonds.
Over the next 10 years, the Japanese government is going to issue a total of 20 trillion yen ($133 billion) in transition bonds on the fledgling market, which has seen $7 billion raised since 2020. Japan hopes that what it calls "GX bonds" (green transformation bonds) will catalyze public and private spending worth as much as 150 trillion yen ($1 trillion) to realize the deployment of technologies such as hydrogen supply networks, carbon capture and utilization, synthetic fuels and small nuclear reactors. The total issue will exceed the primary market for corporate bonds and equities in Japan, which amounts to 15 trillion yen a year.
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