RNS Number : 3015A
  Japan Bank for Intl Cooperation
  31 July 2008
   

June 19,2008
 
JBIC Issues the 31st FILP Agency Bond (JBIC Environmental Support Bond)
--An issuance of 20 billion yen for 5-year bonds on the concept of *Contribution to Global Environment*--
 
1.      Japan Bank for International Cooperation (JBIC; Governor: Koji Tanami) launched on June 19 5-year FILP Agency bonds (public offering
of non-government guaranteed domestic bond; called *JBIC Environmental Support Bond*) for 20 billion yen, based on the concept of
*Contribution to Global Environment* in Japanese capital markets. Under the volatile market conditions, JBIC has tried to take into
consideration market conditions and investors* demands carefully through investor relations (IR) and marketing. The issue has successfully
attracted demand from wide range of investors (i.e., credit cooperatives, credit unions, regional banks, asset managers, insurance
companies, trust banks, public institutions, educational corporations, religious institutions, etc.) and was oversubscribed.
(Appendix: Schematic flow chart)
 
2.      While JBIC had a plan to issue FILP agency bonds totaling up to 70 billion yen during the first half of FY2008, the plan*s target
has been met by this issuance. The proceeds thus raised will basically be used to finance projects aimed at environmental conservation and
improvement in JBIC*s International Financial Operations (IFOs). 
 
3.      The following are the basic features of the issuance:
 
�31 JBIC Bond Issue (called *JBIC Environmental Support Bond*)
Amount:                      JPY20 billion
Market:                       Japan
Maturity:                      5 years (bullet repayment due on June 20, 2013)
Payment date:           June 27, 2008 
Coupon rate:              1.51 %
Issue price:                99.98%
Re-offer yield:            1.514 % (JGB�72 + 18bp)
Collateral:                   General collateral
Underwriter:               Mitsubishi UFJ Securities Co., Ltd. (Lead Manager)
Rating:                        Aaa (Moody's Investors Service Inc.)
                                    AA (Standard & Poor's Rating Services)
                                    AAA (Rating and Investment Information, Inc.
                                    AAA (Japan Credit Rating Agency, Ltd.)
 
4.      Based on the concept of *Contribution to Global Environment* and incorporating two different arrangements-*bond issuance* and
*emission trading*, this bond issuance provides an opportunity for the issuer, institutional investors and the underwriter to show
dedication to global environment through fundraising and utilization, investment into bonds, and trading of carbon credits [1],
respectively. 
(1)   The proceeds thus raised will basically be used to finance projects aimed at environmental conservation and improvement in the
International Financial Operations (IFOs) of JBIC. 
(2)   The Underwriter (Lead Manager) pays a part of the underwriting fee to a non-profit, separately-established intermediary corporation,
and this corporation will purchase carbon credits and eventually writes them off[2] .
(3)   Investors may offer part of the interest they receive on the coupon payment date to the intermediary corporation voluntarily, to
enable the corporation to purchase carbon credits for its eventual write-off[3].
(4)   When acquiring carbon credits, the non-profit intermediary corporation is expected to use Carbon Credit Trading Platform
(http://www.joi.or.jp/carbon/) operated by Japan Institute for Overseas Investment (JOI) with the cooperation of JBIC. Investors may also
have access to this Platform through the underwriter firm, if they so wish.
 
Despite various arrangements made in line with the concept above, this bond issuance basically remains unchanged from the traditional JBIC
FILP agency bonds in nature: fixed income straight bonds with general collateral and bullet repayment.
 
5.      With global environment drawing increasing attention across the world, JBIC to date has made commitments to the sound development of
Japan and the international community which are compatible with environmental conservation and improvement, by supporting GHG reduction
projects under the Kyoto Protocol as well as projects to upgrade environmental conditions by way of loans, guarantees, equity participation
and various information services, etc. In addition, as the idea of *Socially Responsible Investment (SRI)* gradually finds its way in Japan
as well as abroad, products targeting retailers such as equity investment trusts with an environment theme are already proliferating in the
Japanese market. On the other hand, deeply taking root among some market players is a view that giving priority to economic returns and
shareholders* value would be hardly compatible with the idea of SRI. Under this situation, bond products assuming the participation of a
wide range of institutional investors have been underdeveloped in the Japanese capital market. Taking into account such circumstances, JBIC has decided to issue the bond on a new scheme.
 
 
[1] Emission reductions (popularly called carbon credits) generated by a project implemented under the Clean Development Mechanism (CDM),
one of the Kyoto Mechanisms. Kyoto Mechanisms are economic arrangements set out in the Kyoto Protocol to achieve the target of reducing GHG
(greenhouse gas) among industrial countries and countries with economies in transition (Annex I parties) and consist of the Clean
Development Mechanism (CDM), Joint Implementation (JI) and Emissions Trading. CDM enables industrial countries to undertake joint GHG
emissions reduction projects with developing countries, with the investing country (industrial country) being allowed to use emissions
reduction credits generated from such projects to meet its own GHG emissions reduction target.
[2] Carbon credits purchased by the intermediary corporation will be posted on the national registry operated by the government of Japan,
and then transferred from the account held by the intermediary corporation to the government account, for eventual write-off.
[3] Since no agreements have been made over how to deal with emissions trading after the end of the first commitment period (2008-2012) of
the Kyoto Mechanisms, the application period for investors* contribution to the intermediary corporation will end on July 20, 2012.


    

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