Tokyo Turns to International Investors for Green Funding in Pioneering Bond Issue

In a move that could pave the way for other Japanese local administrations, the Tokyo Metropolitan Government is set to issue a landmark sustainability bond in October, targeting international investors to fund its environmental objectives, Bloomberg reports.

The city plans to raise up to ¥50 billion (around $350 million) through the sale of foreign-currency notes, primarily targeting European investors. This will be the first such issuance by a Japanese local government, marking a shift towards greater reliance on international bond markets, particularly for sustainable projects.

Makiko Hashiguchi, Director of the Tokyo Metropolitan Government’s bond section, explained that the move is driven by the need to reduce reliance on Japanese yen bond markets, which have experienced significant interest-rate fluctuations.

“We expect the timing of this foreign bond issue to be attractive to investors,” Hashiguchi said, “as we anticipate that interest rates will be lowered in the future.”

The initiative marks the first time Tokyo has sought foreign funding for its environmental policies. The city has appointed Goldman Sachs Group Inc. and three other international banks as lead managers for the issuance.