Japanese multinational conglomerate Hitachi (NASDAQ: HTHIF) has launched a JPY10 billion ($69.3 million) unsecured digital green bond, the largest of its kind in the country.
Hitachi first announced the five-year bond in mid-November, revealing that it would use a green hub to track the reduction of CO2 emissions. Developed in partnership with the Japan Exchange Group (JPX)—which owns the Osaka Exchange and the Tokyo Stock Exchange—it offers emission data to the investors.
Hitachi and JPX partnered with Japan’s largest investment bank, Nomura and BOOSTRY, a blockchain firm majority-owned by Nomura, which provides the blockchain technology for the green bond and has received the highest rating from Moody’s.
Hitachi will channel the proceeds of the bond to refinancing the construction and refurbishment of “Kyōsō-to of the Central Research Laboratory (energy-saving building),” the company said in a statement. The building was refurbished in 2021.
Bond issuance typically involves a central securities deposit, which acts as the intermediary, holding the securities and allowing their ownership to be easily transferred. The use of blockchain eliminates the need for a middleman, with a DLT-based platform serving as the securities registry.
The four organizations have partnered before on similar initiatives. In 2022, they worked on a $3.5 million corporate green bond, with Nomura as the underwriter and Hitachi tracking the emissions. They touted it as the first wholesale digital green bond in Japan.
JPX later involved over 50 Japanese companies to study the lessons learned from the first attempt. Among the challenges they found was settlement issues due to a lack of on-chain payment solutions. This forces the participants to turn to legacy payment systems that are outside the scope of the blockchain ecosystem.
The consortium will explore on-chain payment settlements throughout the five-year bond, including the possible use of a regulated stablecoin. Japanese companies are stepping up their stablecoin efforts, with the largest bank, MUFG (NASDAQ: MUFG), most recently announcing a partnership with yen-backed stablecoin JPYC.
